Singapore: CDL Hospitality Trust acquires Munich hotel for $112m

Visual from Pullman Hotels website

Singapore-based CDL Hospitality Trusts (CDLHT) has acquired four-star rated Pullman Hotel Munich in Germany for up to $112 million (€98.9 million).

The acquired hotel, including its office and retail components, will be fully funded by debt financing and is accretive with a net property income yield of 5.6 per cent for FY 2016.

CDHLT is a stapled group comprising CDL Hospitality Real Estate Investment Trust (H-REIT), a real estate investment trust, and CDL Hospitality Business Trust (HBT). The group’s assets are valued at S$2.5 billion.

Acquiring the high quality asset at Bavaria, CDHLT considers the deal a rare opportunity as it strengthens its portfolio and earnings base through diversification.

Vincent Yeo, CEO of CDLHT’s managers, said Munich is a compelling destination for the company’s first acquisition in continental Europe, allowing CDLHT to benefit from a potential economic recovery in the region through exposure to the largest economy in Europe.

CDLHT also disclosed of raising S$255.4 million by launching a fully underwritten and renounceable rights issue as it realigns its capital structure through partially repaying its existing borrowings. This is expected to enhance the Singapore-listed firm’s financial flexibility through reduced gearing and increased debt headroom.

The company noted partial repayment of existing higher interest-bearing borrowings will also lower its weighted average cost of debt and further improve its interest coverage ratio.

“The acquisition of Pullman Hotel Munich facilitates CDLHT with a strategic entry into Germany and allows us to penetrate a highly sought-after hospitality market while enjoying a spread between the attractive property yield and ultra-low borrowing rates,” Yeo said.

He expects the equity fund raising exercise will strengthen CDLHT’s balance sheet and enhance financial flexibility, allowing it to pursue future growth opportunities, through acquisitions and asset enhancement initiatives.

“Once our acquisition in Munich and equity fund raising are completed, CDLHT’s portfolio will see the addition of two new European properties in 2017 and our total valuation of the portfolio will increase from S$2.4 billion at end 2016 to S$2.7 billion,” Yeo added.

CDLHT currently owns 19 properties with a total of 5,077 hotel rooms, comprising six hotels and a retail mall in Singapore, five hotels in Australia, one hotel in New Zealand, two hotels in Japan, two hotels in United Kingdom and two resorts in Maldives.

CDLHT is managed by M&C REIT Management Limited and M&C Business Trust Management Limited, subsidiaries of Millennium & Copthorne Hotels Plc, an internationally recognised hospitality group, which owns and operates hotels globally and is listed on the London Stock Exchange.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.