Hot stock: Oxley shares up 7% up on news of deal to sell Stevens Road hotels

SHARES in property developer Oxley Holdings were on a tear in Friday's early session, adding 11.8 per cent to hit a three-month high at 9.03am when it traded at 33 Singapore cents. At the end of the early session, Oxley traded two Singapore cents or 6.8 per cent higher at 31.5 Singapore cents.

The counter, which averaged a turnover of 1.9 million shares over the last 15 trading days, was also seeing comparatively heavy trading, with 9.9 million shares changing hands in the early session.

The boost in the counter's price comes on the back of news which broke late Thursday that Oxley had accepted a letter of intent (LOI) for the purchase of its Mercure and Novotel hotels along Stevens Road for S$950 million, in what market watchers have called an urgent attempt by the developer to pare its debt.

The Business Times understands that the buyer is Indonesian magnate Tahir and that the deal is understood to be brokered by Michelle Lek, director of investments at Quillion Global, a real estate investment advisory company.

Based on Oxley's latest corporate presentation in November 2018, the hotels were valuated at S$905 million, while the valuation of the whole development, which includes retail and food-and-beverage units, is S$1 billion. The presentation also showed that the two hotels generate a total recurring income of S$53 million per annum, based on an 83 per cent occupancy rate.

Oxley had bought the plot of land from motoring tycoon Peter Kwee's Exklusiv Resorts in March 2013 for S$318 million. The leasehold estate came with a 103-year tenure starting in July 2013.

In late 2017, the 254-room Novotel Singapore and the 518-room Mercure Singapore on Stevens began operations and were Oxley's maiden foray into the hospitality business. They are the developer's only hotel assets globally.