RB Capital said to be in exclusive due diligence on Andaz hotel at Duo

Singapore

RB Capital is understood to be conducting exclusive due diligence for Andaz Singapore at the Duo project with a view to buy the 342 room hotel.

The hotel occupies the upper levels of the 39-storey tower in the Beach Road mixed development by M+S Pte Ltd, a 60:40 joint-venture between Malaysia's Khazanah Nasional and Singapore's Temasek Holdlings.

Talk in the market is that RB Capital could be negotiating to buy the hotel for around S$470-480 million, which would work out to about S$1.4 million per room.

A deal for Duo's office and retail space may be a little further away, with more than one party likely to be doing due diligence, after which they are expected to submit their best offers - from which M+S will select the buyer.

M+S, declined to comment when contacted by The Business Times.

Rooms in the Andaz, which has been operating since late 2017, are trading in the mid-S$300 range on average a night. The hotel's operations have yet to stabilise. The standard room size is 38 square metres, with suites ranging from 76 to 152 sq m.

Andaz has a string of restaurants and bars. The hotel occupies Levels 24 and upwards of the 39-storey tower. Meeting rooms and two ballrooms are on Level 3. Offices sit on Levels 4 to 23. Andaz is managed by Hyatt group, which also operates the Grand Hyatt in Scotts Road.

If RB Capital emerges as the buyer of Andaz Singapore, this will be the group's fourth hotel in Singapore, after InterContinental Singapore Robertson Quay, Holiday Inn Express Clarke Quay and Park Hotel Farrer Park.

Its three existing hotels add up to around 1,000 rooms.

RB Capital, set up by Kishin RK in 2006, and Royal Holdings, run by his father, Raj Kumar Hiranandani, also own The Quayside, a riverfront F&B strip next to the InterContinental Robertson Quay, as well as a portfolio of strata retail units in Singapore.

The father-son duo also own EFG Bank Building in North Bridge Road and RB Capital Building in Raffles Place in Singapore, and 33 Jalan Sultan Ismail in Kuala Lumpur. An acquisition of Andaz Singapore in the Duo mixed development project will give RB Capital exposure to an area that is undergoing rejuvenation.

Besides the 39-storey tower where Andaz and the offices are housed, the Duo project's other tower, which is 49 storeys high, is where 660-unit Duo Residences, which is mostly sold out, is located.

The development's 56,000 sq ft retail component, Duo Galleria, is on Level 1 and Basement 3.

The Duo is on a site with 99-year leasehold tenure. The clock started ticking down on July 1, 2011, leaving about 91.5 years on the lease.

The initial expressions of interest exercise for the office, retail and hotel components in the project closed in November last year. This was following by a second closing in December to identify potential candidates to conduct due diligence before they finalise their bids.

For the hotel component, a few bids are understood to have been received at the second closing, following which RB Capital was picked to conduct exclusive due diligence.

For the office and retail space, talk in the market is that CapitaLand group is one of the parties doing due diligence, possibly in partnership with JP Morgan.

Hong Kong-based Gaw Capital Partners, is also believed to be in the race.

M&G was also on the earlier shortlist, though it may have dropped out.

ARA Asset Management is also said to have looked at the asset.

Gaw Capital Partners, set up by brothers Goodwin and Kenneth Gaw, owns two properties near the Duo project: Hotel G in the Bencoolen Street/Middle Road area and PoMo in Selegie Road.

Gaw Capital last month completed its acquisition of Robinson 77 for S$710 million.