TPG Angelo Gordon is teaming up with Hong Kong’s Far East Consortium and Atelier Capital Partners to acquire a hospitality asset near Singapore’s Changi airport from Frasers Property for S$170 million ($127 million), according to market sources.
The partners on Tuesday agreed to buy the 313-room Capri by Fraser, Changi City serviced residence from Frasers, people privy to the matter told Mingtiandi on Wednesday. The deal was signed on the same day that Frasers Hospitality Trust said it was waiving its right to buy the property under a right of first refusal agreement with its sponsor, with the SGX-listed REIT indicating that the opportunity does not align with its current investment strategy.
The US fund manager is teaming with HKEX-listed FEC and Atelier Capital, a fund management unit of Edward Wong Development, to pick up the serviced apartment block after multiple sources confirmed to Mingtiandi in January that Frasers Property was undertaking a strategic review of its overall business after falling to a $54 million loss in the half-year ending 30 September. In communications with Mingtiandi on Thursday, a Frasers Property representative said that no such review had taken place.
Days after the strategic review was reported, Frasers announced that it was promoting Anthony Boyd to group chief operating officer as part of a broader management transformation. On 14 March Frasers announced a joint venture with ESR to develop an A$900 million ($595 million) industrial estate in Melbourne, Australia and followed up the next day by announcing that it will divest four logistics assets in Germany to SGX-listed Frasers Logistics & Commercial Trust.
Exiting at 6% Premium
The serviced apartment complex spans 209,896 square feet (19,500 square metres) of gross floor area across 12 levels, with apartments ranging from 344 square feet to 753 square feet in area.
The agreed consideration translates to S$543,130 per key, which is about 6.3 percent above the property’s book value of S$160 million or S$511,182 per room as of September 2023, based on Frasers’ latest annual report.
Industry players who spoke with Mingtiandi said the new owners could explore asset enhancements on the 2012-vintage asset, potentially adding more beds or resizing the existing rooms to boost revenues.
Rates at Capri by Fraser, Changi City averaged S$260.20 per night in the 12 months ending September 2023, which was up 59 percent from the S$164.1 average a year earlier, as travellers returned to Singapore. The property’s occupancy, however, dipped to 86 percent from 91 percent over the same interval.
Located at 3 Changi Business Park Central 1, the property, which has 45 years remaining on its land-use rights, is about five minutes’ walk from the Expo MRT station. The building is one MRT stop from the airport, as well as from Changi City Point, which Frasers Centrepoint Trust, sold for S$338 million in October.
“Frasers Property’s business adopts an active portfolio management approach to optimise capital productivity. This includes acquisitions and recycling of capital… via capital partnerships or divestments to the Group’s REITs or third parties,” a company representative told Mingtiandi, without commenting on the deal with the TPG Angelo Gordon-led consortium.
With the project located on land administered by JTC Corp, completion of the deal is contingent on approval from the agency, which regulates use of industrial land in Singapore.
Hospitality Gains Attention
Before being acquired by TPG in a deal which closed in November of last year, Angelo Gordon had been raising capital for AG Asia Realty Fund V, with the opportunistic strategy traditionally including hotels among its target sectors
In December 2022, Angelo Gordon had teamed up with developer Wang On Properties to acquire the Pentahotel Hong Kong from New World Development for HK$2 billion (then $260 million). That acquisition came after the US private equity firm partnered with Weave Living in May of that year to acquire the Grand City Hotel in Hong Kong’s Sai Ying Pun for $115 million, with that property since converted into a Weave Living apartment community.
With FEC involved in the deal, the consortium includes an experienced serviced apartment operator, as the company’s Dorsett Hospitality International division operates 53 hotels and serviced apartments globally, including Dao by Dorsett AMTD Singapore and the Dorsett Singapore serviced apartment on New Bridge Road.
In 2022 Atelier Capital Partners, which through Edward Wong Development was an early backer of Chongbang Development’s LifeHub projects in Shanghai, hired former Colliers executive Terence Tang to serve as its chief executive officer for Singapore, as the company looked to ramp up its presence in Southeast Asia’s wealthiest city.
Note: This story has been updated to indicate Frasers Property’s stance that it has not undertaken a strategic review of its business.
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