CDL Hospitality Real Estate Investment Trust (CDL H-Reit) has purchased the Novotel Clarke Quay in a deal that prices the 398-room hotel at $219.8 million or about $552,000 per room.
The amount comprises a purchase amount of $201 million and assumption of potential liability of about $18.8 million. The hotel site has a remaining lease of about 70 years.
For the seller, a Lehman Brothers entity, the divestment represents a doubling of its investment. Lehman bought the hotel, then known as Hotel New Otani, in 2004 for $82 million from a Wuthelam Group-controlled entity and spent a further $19 million renovating it, resulting in an all-in investment of around $101 million. It later appointed French hotel chain Accor to manage the hotel under the four-star Novotel brand.
Jones Lang LaSalle Hotels brokered the latest sale.
CDL H-Reit is part of a stapled group, CDL Hospitality Trusts, which is listed on the Singapore Exchange.
Singapore-listed City Developments Ltd’s London-listed hotel arm, Millennium & Copthorne Hotels (M&C), has a 39 per cent stake in CDL Hospitality Trusts.
The yield-accretive acquisition of Novotel Clarke Quay will boost CDL Hospitality Trusts’ Singapore hotel room count by around 20 per cent to 2,324, making it Singapore’s biggest hotel owner, in terms of number of rooms. The acquisition will also see the value of the trusts’ properties grow from about $1.1 billion to $1.3 billion.
CDL H-Reit will enter a lease agreement appointing the hotel’s incumbent manager Accor SA to manage and operate the hotel under the Novotel flag until end-2020, for a fee that works out to a tad below 10 per cent of the hotel’s gross operating profit. The projected annualised property yield of the hotel for this year is about 5.5 per cent, higher than the 3.9 per cent implied property yield for CDL H-Reit’s current portfolio for the current year.
The acquisition is forecast to boost annualised 2007 distribution per unit (based on Q1 2007 results) by 8.9 per cent, from 7.10 cents to 7.73 cents. Vincent Yeo, CEO of M&C Reit Management Ltd, the manager of CDL H-Reit, said that assuming the acquisition of Novotel Clarke Quay is fully funded by debt, the trusts’ gearing ratio will increase from 35 per cent to 46 per cent. He said that while the trust is on the lookout for more hotel acquisitions in the Asia-Pacific - in countries like China, India, Philippines and Vietnam - Singapore still remains one of his favourite markets because of its growth potential and risk profile.
For Q1 2007, CDL Hospitality Trusts’ Singapore hotels achieved a 25.4 per cent year-on-year increase in revenue per available room (RevPar). ‘Based on the strong performance so far in the second quarter, the industry players expect a much higher year-on-year RevPar growth in Q2. And we expect that to be the same for the hotels in the CDL Hospitality Trusts.’
The acquisition of Novotel Clarke Quay will increase CDL Hospitality Trusts’ exposure to the strong Singapore hotel market, which is expected to benefit from continuing strong growth in visitor arrivals and minimal new hotel room supply this year and next.
Source: The Business Times, 18 May 2007
Friday, May 18, 2007
These are good times to own real estate. On average, private home prices have risen nearly 20 per cent in the past two years
These are good times to own real estate. On average, private home prices have risen nearly 20 per cent in the past two years, and the trajectory appears stable. Property purchases become more compelling with each passing week. Who can argue against people building equity through the homes they live in? But as everyone knows, rising prices also have sparked a new wave of feverish speculation. And newly released data from Credit Bureau Singapore give a hint of the level of activity: As of March, the number of people with two or more mortgages had risen to around 41,000, up 58 per cent from a year ago and 106 per cent from two years back.
Is there reason to worry? Not at the moment. A certain level of speculation is normal for any market; it keeps prices buoyant, generating wealth. Without speculation, markets would stagnate. Indeed, so long as price trends remain comfortable, there is little danger. In fact, other figures from CBS show that even as the total number of mortgages has risen, the number of delinquent accounts has actually fallen; in percentage terms, it dipped to 2.23 per cent in February from 2.80 per cent in March last year. The market is in a sweet spot. That, however, is no reason to be incautious. The economy is completely exposed to external factors. Although the internal attributes of the economy remain strong and are gaining vigour, buyers must understand that global macroeconomics plays a role in Singapore’s fortunes. They need only think back to the late 1990s for a cautionary tale.
Because of this, there is no argument for suspending normal prudential calculations despite the bullish tone of the market. Of course, owner-occupied real estate, a favoured form of investment, is one thing; whatever happens, people have to live somewhere and a mortgage payment is not unlike rent. But speculative investments can be a burden if things turn sour for any number of reasons. And property ownership involves maintenance costs, so investors must be reasonably certain of their future cash flow. But the key issue is to be wary of the point at which reasonable speculation tips over into the unhealthy zone, when the bulls become too exuberant. When markets self-correct, they can be punishing. And as properties are illiquid investments, it is harder to get out than to get in. Hence, although times now are good for a punt on properties, nothing comes without risk. It is best to think twice about one’s appetite for risk before signing for a second mortgage loan.
Source: The Straits Times, 18 May 2007
Is there reason to worry? Not at the moment. A certain level of speculation is normal for any market; it keeps prices buoyant, generating wealth. Without speculation, markets would stagnate. Indeed, so long as price trends remain comfortable, there is little danger. In fact, other figures from CBS show that even as the total number of mortgages has risen, the number of delinquent accounts has actually fallen; in percentage terms, it dipped to 2.23 per cent in February from 2.80 per cent in March last year. The market is in a sweet spot. That, however, is no reason to be incautious. The economy is completely exposed to external factors. Although the internal attributes of the economy remain strong and are gaining vigour, buyers must understand that global macroeconomics plays a role in Singapore’s fortunes. They need only think back to the late 1990s for a cautionary tale.
Because of this, there is no argument for suspending normal prudential calculations despite the bullish tone of the market. Of course, owner-occupied real estate, a favoured form of investment, is one thing; whatever happens, people have to live somewhere and a mortgage payment is not unlike rent. But speculative investments can be a burden if things turn sour for any number of reasons. And property ownership involves maintenance costs, so investors must be reasonably certain of their future cash flow. But the key issue is to be wary of the point at which reasonable speculation tips over into the unhealthy zone, when the bulls become too exuberant. When markets self-correct, they can be punishing. And as properties are illiquid investments, it is harder to get out than to get in. Hence, although times now are good for a punt on properties, nothing comes without risk. It is best to think twice about one’s appetite for risk before signing for a second mortgage loan.
Source: The Straits Times, 18 May 2007
Angst in Anaheim
Angst in Anaheim
ScottDarrell
Friday, May 18, 2007
National headlines have declared a rift in the 50-year relationship between the Walt Disney Co and the city of Anaheim, California. Disney has sued the city - for the first time - to block a mixed-income housing development, and is leading efforts to get two measures on the ballot that would determine the future development of sites near its Disneyland resort.
While most of the coverage and commentary have focused on Disney's heavy-handed response, the underlying story is one of greater significance to many California communities: the lack of affordable housing.
More than 200 workers and residents attended the April 24 Anaheim City Council meeting during which the project was approved. Many people shared their stories of raising children in overcrowded and substandard apartments, mobile homes and motel rooms. Their message was clear: If we are good enough to work here, then we should be able to live here in high-quality, affordable homes.
At the meeting, Councilwoman Lorri Galloway captured the reality of Anaheim's resort-area neighborhoods with some startling statistics: 6,000 low-wage jobs - with wages averaging less than US$15 (HK$117) an hour - were added in the resort district since 2000, but no new homes affordable to those workers were developed.
The rental vacancy rate is less than 4 percent, and a worker must earn about US$29 an hour to afford the typical two- bedroom apartment. Many workers must double and triple up in overcrowded homes, and about 850 homes near the resort are categorized as "extremely substandard" and lack basic plumbing and kitchen facilities. As a result, Anaheim ranks fifth in the nation among cities with the most overcrowded housing conditions.
More than 35,000 Orange County residents are homeless, according to the latest figures, and more than half of them are members of working families with children. For many of its resort-area workers, Anaheim is clearly not the happiest place on Earth to live.
Disney's opposition to the housing proposal may seem simple enough: Disneyland is the city's economic engine, and the resort area is zoned only for projects with compatible commercial uses. "This [resort] district pays for police services and fire services and parks and repairs," Disney spokesman Rob Doughty said. "This is the major funding source for this city, and it perplexes us as to why they would jeopardize it."
However, Disney's position points to a major, if not the major, problem California communities face. Proposition 13 limitations on commercial and residential property tax increases have made local governments dependent on sales and hotel "bed" taxes to pay for community services. All too often elected leaders feel compelled to choose the development of new hotels, shopping centers and auto malls over new homes, regardless of the housing needs.
Others in the community have argued that Disney and the city have no role in "subsidizing" housing for low-wage workers. But this "let the market prevail" argument ignores more than 70 years of federal, state and local involvement in the housing market. Generations of families have achieved homeownership through federally subsidized and guaranteed loans. One form of "subsidy" is the more than US$70 billion devoted to mortgage interest deductions, a program that helps mostly middle- and high-income homeowners.
Local and state governments also play important roles. Anaheim has invested heavily in rehabilitation loans for substandard apartments, facilitated the redevelopment of small "in-fill" sites as moderately priced homes, and partnered developers to construct new rental communities.
This summer a nonprofit developer will open the first rental housing development affordable to low-wage working families to be built in the city in more than 15 years. Unfortunately, these efforts have not been able to keep pace with housing prices and the rising number of low-wage jobs.
If the resort area is to be reserved for sales-tax generating uses, then housing development sites in every other neighborhood should be identified. The city should provide incentives to developers to build mixed-income rental and homeownership communities on underused commercial and residential sites. An impact fee to help pay for housing construction should be attached to all large-scale commercial development that generates low-wage jobs. The city should require that a portion of all new housing be affordable to low-wage workers.
Most crucially, Disney and the business community must move beyond their "let them live elsewhere" attitude and instead play a role in identifying solutions and support efforts at boosting housing opportunities for all income levels. LOS ANGELES TIMES
ScottDarrell
Friday, May 18, 2007
National headlines have declared a rift in the 50-year relationship between the Walt Disney Co and the city of Anaheim, California. Disney has sued the city - for the first time - to block a mixed-income housing development, and is leading efforts to get two measures on the ballot that would determine the future development of sites near its Disneyland resort.
While most of the coverage and commentary have focused on Disney's heavy-handed response, the underlying story is one of greater significance to many California communities: the lack of affordable housing.
More than 200 workers and residents attended the April 24 Anaheim City Council meeting during which the project was approved. Many people shared their stories of raising children in overcrowded and substandard apartments, mobile homes and motel rooms. Their message was clear: If we are good enough to work here, then we should be able to live here in high-quality, affordable homes.
At the meeting, Councilwoman Lorri Galloway captured the reality of Anaheim's resort-area neighborhoods with some startling statistics: 6,000 low-wage jobs - with wages averaging less than US$15 (HK$117) an hour - were added in the resort district since 2000, but no new homes affordable to those workers were developed.
The rental vacancy rate is less than 4 percent, and a worker must earn about US$29 an hour to afford the typical two- bedroom apartment. Many workers must double and triple up in overcrowded homes, and about 850 homes near the resort are categorized as "extremely substandard" and lack basic plumbing and kitchen facilities. As a result, Anaheim ranks fifth in the nation among cities with the most overcrowded housing conditions.
More than 35,000 Orange County residents are homeless, according to the latest figures, and more than half of them are members of working families with children. For many of its resort-area workers, Anaheim is clearly not the happiest place on Earth to live.
Disney's opposition to the housing proposal may seem simple enough: Disneyland is the city's economic engine, and the resort area is zoned only for projects with compatible commercial uses. "This [resort] district pays for police services and fire services and parks and repairs," Disney spokesman Rob Doughty said. "This is the major funding source for this city, and it perplexes us as to why they would jeopardize it."
However, Disney's position points to a major, if not the major, problem California communities face. Proposition 13 limitations on commercial and residential property tax increases have made local governments dependent on sales and hotel "bed" taxes to pay for community services. All too often elected leaders feel compelled to choose the development of new hotels, shopping centers and auto malls over new homes, regardless of the housing needs.
Others in the community have argued that Disney and the city have no role in "subsidizing" housing for low-wage workers. But this "let the market prevail" argument ignores more than 70 years of federal, state and local involvement in the housing market. Generations of families have achieved homeownership through federally subsidized and guaranteed loans. One form of "subsidy" is the more than US$70 billion devoted to mortgage interest deductions, a program that helps mostly middle- and high-income homeowners.
Local and state governments also play important roles. Anaheim has invested heavily in rehabilitation loans for substandard apartments, facilitated the redevelopment of small "in-fill" sites as moderately priced homes, and partnered developers to construct new rental communities.
This summer a nonprofit developer will open the first rental housing development affordable to low-wage working families to be built in the city in more than 15 years. Unfortunately, these efforts have not been able to keep pace with housing prices and the rising number of low-wage jobs.
If the resort area is to be reserved for sales-tax generating uses, then housing development sites in every other neighborhood should be identified. The city should provide incentives to developers to build mixed-income rental and homeownership communities on underused commercial and residential sites. An impact fee to help pay for housing construction should be attached to all large-scale commercial development that generates low-wage jobs. The city should require that a portion of all new housing be affordable to low-wage workers.
Most crucially, Disney and the business community must move beyond their "let them live elsewhere" attitude and instead play a role in identifying solutions and support efforts at boosting housing opportunities for all income levels. LOS ANGELES TIMES
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