OUE Hospitality Trust's Crowne Plaza Changi Airport. (Photo: REITsWeek)OUE Hospitality Trust's Crowne Plaza Changi Airport. (Photo: REITsWeek)

Singapore-listed OUE Hospitality Trust (OUE H-Trust) (SGX:SK7) announced on 28 November that it has entered into conditional agreements to acquire Crowne Plaza Changi Airport for SGD290 million.

Also to be acquired will the hotel’s extension for SGD205 million once the project is completed. Both acquisitions will be made from a subsidiary of OUE H-Trust’s sponsor, OUE Airport Hotel. This is OUE H-Trust’s first acquisition since listing on 25 July 2013.

Crowne Plaza Changi Airport is a 320-room hotel situated within the vicinity of the passenger terminals of Singapore’s Changi Airport and has been in operation since May 2008. Its extension is currently under construction and will add 243 hotel rooms to the integrated complex bringing the total number of rooms to 563. This is scheduled to be completed around end-2015.

OUE H-REIT said that it expects to acquire Crowne Plaza Changi Airport at an annualised yield of 4.5% and the combined hotel and its extension at an annualised yield of 4.6% once it is completed. The acquisition will be funded by debt and/or equity.

Mr. Christopher Williams, Chairman of the manager for OUE H-Trust’s REIT component, has described the acquisition as an opportunity for OUE H-Trust to add another quality asset to its portfolio. “Crowne Plaza Changi Airport was voted one of the world’s best airport hotels at the Skytrax World Airport Awards 2014”, said Williams.

“Its connectivity to the passenger terminals of Changi Airport enables the hotel to tap the passenger traffic going through the world’s sixth busiest airport for international travel”, he said, adding that the hotel is also located in close proximity to the Changi Business Park and Singapore Expo.

According to OUE H-Trust, Crowne Plaza Changi Airport has consistently enjoyed high occupancy rates of above 85% and has recorded RevPAR growth from SGD231 in FY2011 to SGD235 in FY2013. For the first nine months of 2014, CPCA achieved a RevPAR of SGD241. Upon acquisition, the hotel will be leased to OUE Airport Hotel under a master lease.

The acquisition, if approved by unitholders, will be completed in two phases. As it is currently operating, the acquisition of Crowne Plaza Changi Airport will be completed first followed by the acquisition of its extension around end-2015 after the building has obtained its TOP. The REIT Manager has locked in the purchase price for extension.

Besides the impending acquisition OUE H-REIT’s asset portfolio comprises of the 1,077-room Mandarin Orchard Singapore and the adjoining Mandarin Gallery with a portfolio value of SGD1.76 billion as at 31 December 2013.

Units of OUE H-Trust are currently listed on the Singapore Exchange at SGD0.905.

OUE Hospitality Trust has announced that it will acquire Crowne Plaza Changi Airport for SGD290 million.
OUE Hospitality Trust has announced that it will acquire Crowne Plaza Changi Airport for SGD290 million.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.