LHN Group has made back-to-back acquisitions worth a total of S$36.4 million ($25.4 million) in Singapore within a week as the real estate firm takes on more hotel conversion projects to grow its co-living portfolio.
The SGX-listed asset manager entered into a sale and purchase agreement on Friday to buy Kampong @ Arab Street hostel in Bugis district for S$6.39 million ($4.45 million), which it plans to convert into a four-storey co-living space.
“Once the Arab Street property commences operations, it will expand the group’s portfolio of properties under the co-living business in Singapore, increase brand value of Coliwoo, provide potential capital appreciation to the group and provide additional opportunities to generate revenue,” the company disclosure read.
The Arab Street deal came a week after LHN acquired the 54-key Pasir Panjang Inn for S$30 million, which it also plans to convert into a co-living space.
West Coast, Arab Street Locations
LHN acquired the 3,907 square foot (363 square metre) hostel at 48 Arab Street from Chamber Investment Holdings, a privately held firm, for the equivalent of S$1.636 per square foot. The 1960s property is currently vacant and will be converted for co-living use when the deal is completed later in the year.
The leasehold shophouse has 29 years left on its land tenure, and is located within the Kampong Glam neighborhood, near Bugis MRT station.
LHN announced the Arab Street deal one week after revealing the purchase of a hotel asset on the West Coast. In that acquisition, LHN picked up the Pasir Panjang Inn at 404 Pasir Panjang Road for the equivalent of S$555,555 per key from budget hotel operator LA Group, which has properties in Australia and New Zealand.
The Pasir Panjang property occupies a 16,626 square foot freehold site near the National University of Singapore and the Clementi MRT station.
Both transactions are expected to complete in December, with the properties set to be branded with LHN’s Coliwoo co-living name.
Portfolio to Exceed 1,000 Keys
The latest acquisitions are in line with LHN’s plan to grow its co-living portfolio amid rising housing rents in Southeast Asia’s most expensive city.
“Riding on the promising prospect of the residential rental market in Singapore, the group is looking to launch four new Coliwoo properties in the second half of the financial year ending 30 September 2022 adding another 135 keys into its existing portfolio of 925 keys, as part of its co-living residential business expansion plans,” it said in the report.
Excluding the West Coast and Arab Street acquisitions, the Coliwoo portfolio has six operating co-living residences across the city including two in the central business district. It also has upcoming locations on Orchard Road, Serangoon Road, and River Valley.
LHN booked a S$23.65 million pre-tax profit from its co-living operations in the six months ending 31 March, a more than 20-fold jump from the S$1.12 million the business earned in the same period a year earlier.
Hotel Conversions In Style
LHN’s acquisitions fit into a series of hotel conversions in land-scarce Singapore as investors turn to the hospitality sector for assets they can transform into rental apartments.
In March, Weave Living teamed up with builder SLB Development to convert a row of two-storey shophouses in Bugis district into the rental housing brand’s first location in Singapore. The joint venture bought Hotel Clover Jalan Sultan from investor Teo Kok Hwee’s hotel investment firm Singa Property for S$75 million.
The Lion City tied with New York for the world’s fastest rising luxury residential rents during the first half of 2022, according to a report published last month by Savills.