Co-living operator Coliwoo Holdings is acquiring 2 Changi Business Park Avenue 1 for $101 million, in what is its first significant acquisition since its listing last November.
The property is now run as Park Avenue Changi and is now held by Viva Trust, a sub-trust of ESR-REIT. The hotel is now part of the ESR BizPark @ Changi development, and has more than 250 rooms.
The property is now valued at $100.9 million by ESR-REIT, and the divestment is in line with on-going portfolio rejuvenation strategy to divest non-core assets and recycle capital into higher-quality and higher-growth assets within its core sectors.
According to ESR REIT, the hotel's master lease expired last September and is no longer generating income.
The acquisition is structured as a leasehold estate with a tenure commencing from the completion of the acquisition and expiring one day prior to the expiry of the head lease with JTC Corporation.
The original 30-year lease commenced on Feb 1 2008 and Coliwoo's acquisition comes with an option to renew the lease for another 30 years.
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Coliwoo says the property's location in Changi Business Park gives it access to an established corporate tenant base that is close to the airport and can tap various market segments ranging from transit passengers to aviation personnel to professionals working on the construction of the airport's Terminal 5.
Kelvin Lim, executive chairman and CEO of Coliwoo says this proposed acquisition represents a compelling opportunity to expand the company's co-living portfolio in a location that offers genuine strategic advantages.
"The Changi Business Park site sits at the intersection of multiple demand drivers – from the established business community to the airport ecosystem and major infrastructure development.
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"We are actively building out our co-living portfolio with assets that demonstrate clear repositioning potential, transforming properties that are not achieving their full economic potential into specialised co-living accommodation," he adds.
Adrian Chui, CEO of ESR-REIT, says the divestment lets the REIT further sharpen its strategic focus while meaningfully enhancing the overall quality, resilience and earnings visibility of its portfolio.
"Importantly, the proceeds will provide us with greater financial flexibility, allowing capital to be more effectively redeployed into potentially accretive acquisitions, asset enhancement initiatives and redevelopments within our core sectors such as logistics and high-specifications industrial assets," says Chui.
The parties aim to complete this deal by March 31.
Coliwoo shares closed at 60 cents on Jan 30; ESR-REIT units closed at $2.73 on the same day, down 0.36%.
LHN, the parent company of Coliwoo, closed at 68 cents on Jan 30, down 1.45%.
