OUE Commercial REIT (OUE C-REIT) has embarked on an SGD22 million enhancement of its asset in the east, Crowne Plaza Changi Airport (CPCA).
The enhancements include the addition of 12 guest rooms, a revamp of the all-day dining restaurant, and the creation of new and flexible meeting facilities.
“Our goal of the AEI is to reposition CPCA for its next phase of growth and to be well-positioned to capture the expected rebound in both business travellers and tourist arrivals,” said Brian Riady, Deputy CEO of OUE, the REIT’s sponsor.
“The strategic transformation of underutilised spaces into additional guest rooms and meeting facilities will further drive sustainable returns”, he added.
“This AEI [asset enhancement initiative]is timed to capture the anticipated influx of leisure and business travellers in 2024 and beyond as the recovery prospects of Singapore’s hospitality sector remains positive”, said Han Khim Siew, CEO of the REIT’s manager.
“We believe that these income-generating enhancements will strengthen CPCA’s competitive positioning as a premier hospitality destination in its unique Changi Airport location”, Han added.
OUE C-REIT expects the AEI to be DPU-accretive and the estimated capital expenditure is up to approximately SGD14 million.
The AEI is expected to generate a stabilised return on investment of approximately 10%.
OUE C-REIT intends to draw down on existing loan facilities to fully fund the AEI which is expected to complete by the end of 2023.
The AEI is not expected to have a material effect on the net tangible assets or aggregate leverage of the REIT and its subsidiaries for the financial year ending 31 December 2023.
OUE C-REIT was last done on the Singapore Exchange at SGD0.295, which presently implies a distribution yield of approximately 7.12% according to data on the Singapore REITs table.