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M+S to sell Andaz hotel at Duo for S$475m to Hoi Hup Realty

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The five-star Andaz Singapore hotel occupies the top 15 floors of the 39-storey Duo Tower in the Beach Road mixed-use development by M+S. Duo Tower also houses retail and commercial space.

Singapore

M+S Pte Ltd will sell the hotel component of the Duo mixed-use project for S$475 million to Singapore developer Hoi Hup Realty.

M+S, the national joint venture between Malaysia and Singapore, said on Tuesday that it has agreed to sell all the shares of its wholly-owned subsidiary, Ophir-Rochor Hotel Pte Ltd (the developer and owner of Andaz Singapore) to Hoi Hup.

The proposed S$475 million consideration for the 342-room luxury hotel works out to S$1.39 million per key.

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This is the highest total price ever achieved for a standalone hotel transaction in Singapore, and the third highest in Asia this year, said M+S.

On a per-key basis, The Westin Singapore in Asia Square (in Marina Bay) still holds the record; it commanded S$1.5 million per room in 2013, when it was sold to Japan-based developer Daisho Group.

In the same year, hotel-cum-retail asset Grand Park Orchard was bought for S$1.16 billion by Bright Ruby Resources, an entity controlled by a Du family in China. Its 308-room hotel, excluding the retail podium Knightsbridge, was estimated to have fetched S$364 million or S$1.4 million to S$1.5 million per room, Savills reported in 2013.

The Business Times had reported in February that a potential buyer for Andaz was RB Capital, which was then conducting exclusive due diligence, and possibly negotiating to purchase the hotel for between S$470 million and S$480 million.

Contacted by BT on Tuesday, M+S declined to comment on this.

Managed by Hyatt Hotels Corporation, the five-star Andaz opened its doors in late 2017.

The hotel mainly occupies the top 15 floors of the 39-storey Duo Tower, and features a rooftop venue and an observation deck. Hotel ballrooms and meeting rooms are on Level 3.

Hoi Hup chairman Wong Swee Chun said: "We are attracted to the rarity of this high-quality hotel and its historic significance, being one of M+S' landmark projects. We are especially excited by its strategic location, with Andaz occupying a key node in the transformative Beach Road and Ophir-Rochor Corridor."

The Andaz sale is subject to the customary closing conditions.

Said M+S chief executive Kemmy Tan: "The proposed transaction will enable us to maximise returns to our shareholders, while handing over the reins to an established and exciting developer in Hoi Hup to take the asset forward."

M+S, which also owns Marina One in Marina Bay, is a 60:40 joint venture between Malaysian sovereign wealth fund Khazanah Nasional and Singapore investment firm Temasek Holdings.

Duo Tower is part of the 99-year leasehold, two-tower Duo development on Beach Road by M+S.

Aside from Andaz, Duo Tower houses 570,000 sq ft of Grade-A commercial space on Levels 4 to 23, and a 56,000 sq ft retail component, Duo Galleria, on Level 1 and Basement 3. The other tower, Duo Residences, has 49 storeys and houses 660 apartments.

In July, M+S confirmed it was selling Duo's office and retail areas for S$1.575 billion to Allianz Real Estate and Hong Kong private equity firm Gaw Capital Partners.

JLL is the appointed adviser for the Andaz transaction. On Tuesday, JLL said its research showed that Singapore's hotel investment volumes will likely set a new record of S$2.5 billion in 2019.

Nihat Ercan, managing director and head of investment sales in Asia at JLL Hotels and Hospitality, told BT: "Despite geopolitical uncertainty, there remains a strong weight of global capital seeking opportunities in safe-haven destinations. Singapore is high on investors' radar, largely supported by its positive trading performance, strong visitor arrivals and new tourism initiatives."