Worldwide is adding the ParkRoyal on Kitchener to its Singapore portfolio
Pan Pacific Hotels Group is selling the Parkroyal on Kitchener Road hotel in Singapore’s Little India neighbourhood for S$525 million ($389 million) in the city-state’s largest hospitality deal ever.
The hospitality arm of Singapore property conglomerate UOL Group said in a regulatory filing late Tuesday that it has entered into a sale and purchase agreement with Midtown Properties, a holding company, to sell the 542-key hotel at 181 Kitchener Road at a 24 percent premium to its book value of S$423 million as of end-2022.
Mingtiandi understands that Midtown is a subsidiary of local budget accommodation conglomerate Worldwide Hotels, which started out as a “love hotel” operator and now owns and runs 38 properties across the city-state under six brands including V Hotel and Hotel 81.
Should the parties follow through on the agreement, the Kitchener Road deal will mark the largest single-asset hotel transaction in Singapore’s history and the second biggest in Asia Pacific this year, according to JLL, which brokered the deal. Regional law practice Rajah & Tann Asia (Singapore) acted as legal advisor.
Big Exit in Little India
Pan Pacific is letting go of Parkroyal on Kitchener Road at a price equivalent to S$968,635 per room for the asset located near the Serangoon Road and Farrer Park MRT stations, the latter of which links it directly to the City Square Mall located across the street.
Worldwide Hotels boss Choo Chong Ngen
Built in the 1980s with 21 floors, the four-star hotel is a few steps away from the Mustafa Centre shopping mall and will mark an asset of a larger scale and higher amenity level compared to the rest of Worldwide’s portfolio, while allowing Pan Pacific to sell off an aging property from its mid-market brand.
“The proposed disposal provides a good opportunity for the group to unlock the value of its investment in PKH at an attractive price, and is part of the group’s reconstitution of its overall property portfolio,” UOL said in the regulatory filing.
With a value of S$83 million on UOL’s books, the group expects to record a S$446.2 million gain from the transaction, which is set to close by 31 October.
Industry sources suggest that Worldwide may opt to operate the hotel outside of its existing stable of brands, which include the Hotel Boss, Hotel Mi, Value Hotel and Venue Hotel in addition to V Hotel and Hotel 81.
Budget Operator Ramps Up
Both Midtown and Worldwide are controlled by the family of Singaporean hotel tycoon Choo Chong Ngen, who started in the textile business before launching his first budget hotel chain in the Geylang red light district in 1995. Choo has since expanded a property empire which made him the 16th richest man in Singapore last year based on Forbes’ rich list.
Outside of Singapore, Worldwide lists nine properties on its website, including the 177-key Oakwood Studios Sukhumvit Bangkok, which it purchased last December, and two other boutique hotels in Thailand; two each in Malaysia and Australia; one in Osaka and another in Seoul.
Worldwide did not issue a statement on the transaction.
“This deal underscores the enduring appeal of Singapore as a safe haven investment destination amidst global macroeconomic uncertainty and its status of one of the most attractive long-term hotel markets globally,” said Nihat Ercan, chief executive officer for Asia Pacific at JLL Hotels and Hospitality Group.
Landmark Sale
With interest rates crimping capital flows, the Singapore hotel market has been dominated over the past year by small- to mid-sized acquisitions for conversion purposes.
In September, local investor LHN Group purchased a pair of boutique hotels for S$36.4 million and has since been converting both the Kampong @ Arab Street hostel in Bugis district and the Pasir Panjang Inn into co-living properties.
Earlier in 2022, Hong Kong-based rental housing operator Weave Living led the S$75 million acquisition of Hotel Clover 33 Jalan Sultan through a joint venture with local builder SLB Development. In March that property was reopened as a 65-unit rental apartment location.
In May last year, Vietnam-based Viva Land set a national record price of S$1.8 million per room for the 134-room So/ Singapore hotel on Robinson Road (since renamed as the Hotel Telegraph) from local builder Royal Group.
The five-star hotel was quickly put back on the market for just S$200 million in January as the company, which also has links to a Singaporean entity of the same name, scrambles to dispose of its assets overseas following the arrest of its founder Truong My Lan last October on fraud allegations.
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