The hotel was formerly a six-storey office block. (Image source: Hyatt)
Singapore investment manager Sun Venture has made its first hospitality bet by acquiring a 280-key hotel in central London from UK asset manager Resolution Property for less than £100 million ($126.5 million), according to market sources familiar with the transaction.
Expanding its global portfolio beyond office and retail, Sun Venture closed on its purchase of Hyatt Place London City East in the East End neighbourhood of Aldgate this week, according to a statement by JLL, which brokered the transaction.
Just over three years after notching the UK’s biggest deal of 2020 with its £552 million (then $742 million) purchase of 1&2 New Ludgate in the City of London, Sun Venture is on a mission to continue going beyond the borders of its home market in Singapore, while branching out into higher yielding asset classes.
“This marks our first hotel acquisition and aligns with our strategy to expand and diversify our real estate portfolio,” Esther Siam, director for real estate at Sun Venture said in a statement on Tuesday. “As a firm, we see great strength and resilience in the hotel sector in London and other gateway cities and look forward to growing our footprint in the sector.”
Riding Urban Regeneration
With Resolution having set a guide price of £105 million when it put the hotel on the market in the second half of last year, Sun Venture is acquiring the property at a discount of at least 4.8 percent from that target, based on the estimated price.
Sun Venture made a splash in 2020 with its purchase of 1&2 New Ludgate
On a price per key basis, at a £100 million transaction price the Singaporean player would be paying not more than £357,143 per key for the 93,882 square foot (8,722 square metre) hotel.
“Resolution Property acquired the asset in 2015 and have successfully repositioned and refurbished it into one of London’s most high-performing sustainable hotels,” said Resolution partner Scott O’Donnell. “Having guided the hotel through its opening and stabilisation period, we are pleased to have found a new owner who will continue its story going forward.”
The UK company had created what is now Hyatt Place London City East by converting a 1980s-vintage office building into a hotel in 2021 through a renovation which added three levels to what had been a six-storey block.
Sources estimate that, after including acquiring the office property for a reported £32.5 million, Resolution would have spent around £80 million on the asset, once renovation costs were tallied.
The hotel is located on Whitechapel Road, about 2.5 miles (4 kilometres) from Canary Wharf, and is poised to benefit from the Whitechapel Road Life Sciences Cluster, 3.4-acre (1.4 hectare) economic development project which is part of government regeneration efforts in the area.
Located about 11 minutes’ walk from the hotel, the envisioned life sciences hub is planned to incorporate about 800,000 square feet of life science and commercial space through redevelopment of a set of empty sites and idle buildings surrounding the Royal London Hospital.
Following the transaction, Hyatt Place London City East will continue to be managed by European hotel operator Cycas Hospitality, which has been managing the property since its opening nearly three years ago.
Adding Hospitality
The hotel brings Sun Venture’s portfolio to seven assets globally, four of which are in the UK capital, including 120 Moorgate, a grade A commercial building in the City of London, which it acquired from WeWork Capital Advisors in 2022 for £148 million.
The firm, founded by entrepreneur Ricky Au in 2008, made its London debut in 2020 by acquiring first 1 New Oxford Street, followed soon after by 1&2 New Ludgate, for a combined £726 million.
The company has also been active in Australia, where in 2022 it acquired 50 Miller Street in North Sydney for A$148 million (then $95.9 million). At home, the firm continues to hold a pair of grade A office buildings in central Singapore after selling the Westgate Tower office block in Jurong East to AEW in 2022 for S$680 million.
Foreign Investors Rush In
The Aldgate hotel deal adds to a series of UK acquisitions by Asian investors over the past year, as foreign capital continues to pick up marked-down European properties.
Over the past four months, Singapore’s largest non-state-backed builder, City Developments Ltd, has taken on three UK residential projects, including announcing earlier this month that it had acquired a 209-unit build-to-rent residential project in West London’s White City area for £88 million.
That rental housing acquisition came after CDL in November closed on a pair of deals, including acquiring a residential-led, mixed-use development project in southeast London’s Royal Borough of Greenwich in a joint venture with Galliard Homes.
In December, Japan’s Mitsubishi Estate and Dutch developer Edge bought 125 Shaftesbury Avenue in London for a reported £150 million, picking up that West End asset for about 44 percent less than what the seller paid to acquire the building in 2018.
Data from Knight Frank shows trades of UK commercial real estate assets reached £8.5 billion in the fourth quarter of 2023, up 11 percent from the preceding three months, while acquisitions by foreign investors rose by 51 percent during the same period.
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