Stamford Land Corporation is planning a $1.4bn shake-up of its Australian hotel portfolio
A Singaporean tycoon is planning a $1.4bn shake-up of its Australian hotel portfolio, including redevelopment of two prized assets — possibly into luxury apartments.
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Singaporean tycoon CK Ow is planning a $1.4bn shake up of his Stamford Hotel empire in Australia which could see the repositioning of its leading CBD assets.
The Stamford Land Corporation is planning the spend about $780m on the redevelopment of the Stamford Plaza Brisbane and the Sir Stamford at Circular Quay in Sydney.
Both have been flagged by the company in the past as potential luxury apartment buildings.
SLC also told the Singapore Stock exchange that it is seeking to spend about $70m to upgrade the Stamford Grand Adelaide and/or the Stamford Plaza Melbourne and around $640m in “opportunistic real estate acquisitions”.
The company said the ongoing projects would take about six years.
Over the past two years the coronavirus crisis has shaken the 5-star hotel sector with city properties hard hit by international border closures and lockdowns.
In March 2020, SLC closed five of its hotels in Australia for a period and some have been used as quarantine facilities for travellers.
The latest announcement was a dramatic change in direction for SLC, which announced last year that it was looking at putting much of its $1bn portfolio of Stamford Hotels in Australia on the market.
The company told the SGX that the possibility of divestments were “exploratory in nature” and had now ceased.
“However, the company may continue to receive unsolicited indicative offers for its hospitality portfolio from time to time and will update shareholders on any material developments on this,” it said.
To fund its $1.4bn strategy, SLC is seeking to raise $S238.9m ($246m) through a proposed renounceable non-underwritten rights issue.
The spending allocation from just the rights proceeds would be about $68m to $73m for the redevelopment of Stamford Plaza Brisbane and Sir Stamford at Circular Quay; $68m to $73m for the asset enhancement of Stamford Grand Adelaide and/or Stamford Plaza Melbourne; and about $95m for other opportunistic real estate acquisitions.
The rest of the $1.4bn plus war chest would come through debt financing and the use of the company’s cash and reserves.
SLC said the cost involved for the projects was significantly more than the rights proceeds and the cash and bank balances of the company combined.
The board said it had considered other alternative forms of financing.
“The board is in the view that debt, bank loans and convertible bonds are definitely necessary but the priority must be to strengthen its balance sheet by means of the rights issue,” the company said.
“With a strengthened balance sheet, such debts can then be raised leveraging off an enhanced capital base.”
Last year SLC flagged that it was considering options for the riverside Stamford Hotel Brisbane, which could be turned over to a residential or commercial project.
SLC has also worked up plans for a $400m rebuild of the Sir Stamford Hotel at Circular Quay near the Opera House into luxury apartments.
At the time SLC said its strategy was to continuously seek out the best use of its assets to optimise profits.
Mr Ow has long toyed with options for his Australian hotel portfolio. In 2011, Singaporean property giant Ascendas agreed to buy three hotels — in Melbourne, Adelaide and Sydney — from Stamford in a $316m deal, but this did not go ahead.
At the time Stamford, Australasia’s largest independent owner-operator of luxury hotels, and an active developer, struck a memorandum of understanding to sell and lease back three hotels: the Stamford Plaza Melbourne, Stamford Grand Adelaide and Stamford Plaza Sydney Airport.
The once high-flying Valad Property Group also made an unsolicited offer of $850m for Stamford’s portfolio of hotels in 2008.
Mr Ow has also been selling local residential property. In 2018, hotel owner Jerry Schwartz and wife Debbie bought the Phoenix Acres estate in Sydney from the Singaporean for close to $67m.
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