The 250 room hotel with a ground floor retail asset sits on JTC land with a 30+30 year initial lease tenure, to expire come January 2068. Coliwoo is targeting to complete the transaction by Mar 31, and plans to convert the asset into co-living use. This includes intensifying room count from the current 250 rooms to 360 rooms, and potentially a refresh of existing amenities at the hotels including a swimming pool and a gym.
The way analyst Geraldine Wong sees it, Coliwoo remains strategic in their entry into the current Park Avenue Hotel Changi, with substantial opportunities to leverage on in the precinct. There is currently only one other hotel (Dorsett Changi) serving the Expo / Changi Business Park precinct, charging rents in the range of $180 to (sub) $300 per night.
"Coliwoo’s new asset will be able to leverage on major groups of travellers in the precinct. Diversified demand audience will include business travelers within the Changi Business Park precinct, group travelers to EXPO, potential accommodation demand from nearby education institute SUTD (Singapore University of Technology and Design). We believe that Coliwoo can easily charge rents above $3,000 per month and still remain price competitive to competitors," says Wong.
She also believes that there remains upside to reap from this conversion from asset intensification through the addition of 110 additional rooms, which will translate to an uplift in asset valuation. "Our sensitivity analysis shows that asset the could be revalued to $160 million ($3,000 per month, on a slightly higher 5% cap rate assumption on about 42 years remaining leasehold)," says Wong, adding that on an NAV perspective, this could mean a double digit uplift on FY2025 pro forma figures.
