Singapore’s Stamford Land Sells Sydney Hotel to Vietnam-Linked Group for $146M

Singapore-listed Stamford Land is selling an Australian five-star hotel to a Vietnamese-backed developer and fund manager for A$210.5 million ($146.37 million) with the new owner set to redevelop the property in Sydney’s central business district into luxury apartments.

Noting that it would book a S$80 million ($57.6 million) gain on the disposal, Stamford Land told the local bourse on Tuesday that it has agreed to sell the 10-storey Sir Stamford at Circular Quay hotel on Macquarie Street to JDH Capital, as the firm controlled by Singapore property tycoon Chio Kiat Ow looks for ways to cash out of its Australian hotel portfolio.

Founded by ex-Macquarie banker Jean-Dominique Huynh and reportedly backed by Vietnamese luxury moguls, JDH may need to invest at least A$380 million to redevelop the property as it adds to its growing portfolio of Aussie luxury residential projects.

Stamford Land, which owns six hotels in Australia, began marketing the properties late last year after COVID restrictions had aggravated years of declining returns on the hospitality properties, and had already begun gaining approvals to redevelop the Sir Stamford as apartments.

Quick Cash

JDH is buying the project near Sydney Harbour through an exercisable option agreement with Stamford Land, which had first applied to redevelop the property in 2017 and had already received preliminary approval to convert the hotel, which occupies a 1,611 square metre (17,340 square foot) site, for residential use.

With the project incorporating the city’s former Health Department Building as a State Heritage site, the Singapore firm expected to win second stage approval, which incorporates the project design in January, according to a report in Australia’s Financial Review. In its statement, Stamford Land said it had expected to begin redevelopment in October of 2023 at an estimated cost of A$380 million over the course of three years.

With the project approved for development of up to 11,028 square metres of gross floor area, including 9,666 square metres of residential and 746 square metres of retail, JDH is paying the equivalent of A$19,088 per square metre of GFA, not including future development costs.

At the agreed consideration, Stamford Land is gaining A$120.5 million more than the property’s current market value of S$59.41 million, helping the Singapore firm to earn S$80 million in net proceeds which it says it will use to repay loans and fund future investments.

“Taking into consideration the capital requirements for the redevelopment of the property, the potential yield for the reinvestment of the sale proceeds from the proposed disposal is higher than the potential yield for the continued operations of the property as a hotel,” Stamford said.

Hotels on the Market

Stamford Land bought the 105-key hotel at 93-97 Macquarie Street in 2000 with the property among the most prominent assets in a hospitality portfolio that the firm was reportedly marketing for A$1 billion last year.

The attempt to exit the portfolio, which includes five Stamford hotels in Australia and another in New Zealand, was later scrapped with the firm declaring its intention to instead focus on redeveloping the Sydney hotel and the Stamford Plaza Brisbane.

Stamford said it had earlier set aside at least S$68 million for redevelopment of the Sir Stamford – nearly a third of the S$239 million raised from a rights issue in February – with the firm saying that those funds will now instead be used to support other projects.

The disposal, which was brokered by JLL, comes shortly after Stamford Land saw its net income jump by nearly fourfold to S$31.9 million in the financial year ending March, as the firm rebounded from a COVID-induced earnings decline. JLL declined to comment on the disposal.

Vietnamese Wealth Flows into Sydney

JDH’s latest acquisition adds another high-end residential project to the Vietnamese-linked developer’s Sydney portfolio, after the firm had earlier purchased the Sirius Building in The Rocks area and the Vibe Hotel Sydney in Rushcutters Bay.

JDH had purchased the Sirius Building, a former public housing complex from the New South Wales government for A$150 million in 2019, and had made headlines by selling a penthouse in the project for A$35 million last year.

With Huynh reportedly having family links to Vietnamese retail mogul Johnathan Hanh Nguyen who chairs luxury importer and distributor Imex Pan Pacific Group, and his wife Le Hong Thuy Tien, who serves as president of the firm, JDH is currently redeveloping the former Vibe Hotel Sydney into 123 apartments after buying the property for A$120 million last year.

JDH had not responded to requests for comments by the time of publication.