Oxley Holdings Ltd is on its way to selling a pair of hotels on Stevens Road, just near Singapore’s Orchard Road shopping district, for a combined S$950 million ($702 million), according to an announcement by the developer to the city’s stock exchange late last week.
In the notice, Oxley said it has received a letter of intent from an unnamed buyer to purchase the Novotel Singapore on Stevens and the Mercure Singapore on Stevens, with the counterparty earning the right to begin due diligence on the purchase following payment of a S$9.5 million sum.
The potential buyer, according to an account in in Singapore’s Business Times, is Indonesian billionaire Dato Sri Tahir, founder of the country’s Mayapada Group. The potential transaction comes as Singapore’s most highly leveraged developer faces a potential funding squeeze after engaging aggressively in the city’s collective sales market over the past two years and buying a trophy commercial asset in the city.
Prime Singapore Hotel Assets Set to Trade
Should the transaction be finalised, Tahir’s Mayapada Group would take possession of the 254-room Novotel and the 518-room Mercure in one of Singapore’s poshest districts. The potential buyer’s LOI gives it the right to conduct exclusive due diligence on the hotels, which occupy the same site on Stevens Road, near the intersection with Balmoral Road, until April 15th of this year, with the S$9.5 million deposit being non-refundable.
The pair of properties were opened in late 2017, and in materials distributed by Oxley in November of last year, were said to generate recurring income of S$53 million per year at 83 percent occupancy and to have a valuation of $905 million. Oxley had purchased the 103-year leasehold site for S$318 million in 2013.
The hotels are Oxley’s only Singapore hospitality assets alongside an existing project in Cyprus as well as hotels under development in Kuala Lumpur and Phnom Penh. Apart from its home base in Singapore, the company has undertaken residential developments in four countries in Southeast Asia, as well as the UK and China, according to its website.
Oxley Manages Cash After Acquisition Binge
The biggest asset in Oxley’s portfolio is Chevron House at Raffles Place, an aging commercial complex which the developer agreed to purchase for S$660 million in December 2017.
That commercial acquisition came just one month after Oxley had purchased the Mayfair Gardens condo complex for S$311 million in a collective sale, with the developer teaming up with partners in July of 2017 to purchase the Serangoon Ville project for S$499 million and also buying the Rio Casa project together with Lian Beng Group for S$575 million in May of 2017.
Following that acquisition spree, Oxley’s net gearing rose to 2.45 times as of the end of September last year, up from 1.9 times at the end of 2017. During the three months ending September the developer’s profits dropped 83 percent to S$8.06 million from S$48.74 million for the same quarter of the previous year, with revenues declining 45 percent.
In November of last year Oxley agreed to sell a 300-year leasehold of a Dublin mixed-use property that it had built for S$166.32 million.