OUE Sells Oakwood Apartments in SG to Far East Consortium-AMTD JV for S$289M

OUE has agreed to sell the hotel and serviced residence component of its OUE Downtown project, along with the associated business operations, to a pair of joint ventures between Far East Consortium and Hong Kong investment bank AMTD Group for a combined S$289 million ($212 million), according to an announcement by the Singapore-listed developer.

OUE is selling off the hospitality portion of the renovated tower at 6 Shenton Way in Singapore’s downtown core one year after selling the office portion of the two tower complex to its OUE Commercial Real Estate Investment Trust affiliate.

The acquisition by the Hong Kong duo comes after investors from the city committed $1.4 billion into Singaporean real estate opportunities during the first half of 2019 as part of a growing wave of interest in the city-state’s property assets.

FEC Teams Up With AMTD for Singapore Buy

In a statement released by Far East Consortium (FEC), which is participating in the joint venture acquisitions through its Dorsett Hospitality International division, called the deal “attractive”, given the location, quality and potential of the property. FEC committed a total of S$142 million for its 49 percent stake in the acquisitions, while AMTD, which listed on the New York Stock Exchange last month, is paying S$147 million for a 51 percent holding.

“Adding a second hotel in Singapore will also allow us to solidify our platform and extract synergies,” said Chris Hoong, managing director of FEC. “This acquisition will start contributing right away, immediately increase our geographical diversification and fits our ‘Asian Wallet strategy,” he added.

OUE’s Dorsett Hospitality International division currently operates the Dorsett Singapore, a 285-room, four-star property in the city’s Outram Park area.

Under the agreement with OUE, the FEC-AMTD joint venture is taking possession of the 268-room hospitality asset, which is currently operated as Oakwood Premier OUE Singapore, for a consideration of S$287.1 million, with the property comprised of studio, one- and two-bedroom units.

Originally built as serviced apartments, and having added a hotel license earlier this year, the 99-year leasehold property occupies the seventh through the 32nd floors of Tower 1 in OUE Downtown and also includes two dining facilities and other amenities. The leasehold on the 25,054 square metre (‭‪269,679‬‬ square foot) property is set to expire in July 2066, with FEC indicating in its statement that 23,234 square metres of the property are authorised for strata title sale.

As part of the same transaction, OUE is also selling the serviced apartment and hotel business that currently operates in the property to a separate joint venture between Dorsett and AMTD for S$1.9 million ($1.4 million). “We believe that the Singapore market is very attractive and deem that the operational performance of this hotel can be enhanced in the short term and the medium term,” FEC’s Hoong said.

Residential Asset Sold Two Years After Renovation

In its statement, OUE indicated that the developer had earlier offered the same sales terms for the property to OUE Commercial Real Estate Investment Trust, with the manager of the listed trust opting not to exercise its right to purchase the asset before it was made available to other buyers on the basis that it believed such an acquisition would not be accretive to the trust’s distributions per unit.

Last September, OUE sold the office component of the project, containing the 35^th to 46^th storeys of Tower 1 and the 7^th to 34^th storeys of Tower 2, to OUE C-REIT for $908 million ($661 million). The commercial complex also includes a retail podium branded as Downtown Gallery.

OUE completed a refurbishment of the OUE Downtown complex in 2017 after originally purchasing the former DBS Building Towers for S$870.5 million in 2010. The renovation included converting the low to mid-zone section of OUE Downtown Tower 1 into the serviced apartment facility.

Central Singapore Still a Hotspot for Investors

The acquisition by the FEC-AMTD joint venture comes as the latest in a series of deals for prime Singapore commercial assets this year.

Just over one month ago Arch Capital agreed to purchase Anson House, an office building less than a kilometre south of OUE Downtown from a fund managed by Savills Investment Management for S$210 million.

That deal in the city’s Tanjong Pagar area came just days after Singapore-based investment firm Sun Venture just five days ago paid S$744 million to purchase 71 Robinson Road, an office building midway between Anson House and OUE Downtown, from a unit of Germany’s Commerzbank.

In late July Gaw Capital and Allianz announced their S$1.6 billion joint purchase of the Duo complex in Singapore’s Bugis area from a joint venture between Malaysia’s strategic investment fund, Khazanah Nasional Berhad, and Singapore’s state-owned investment company, Temasek Holdings.