What happened
City Developments Limited (SGX: C09), or CDL, announced that it has completed the acquisition of the Hilton Paris Opera Hotel for a sum of €240 million.
The seller is a fund managed by Blackstone Inc (NYSE: BX).
Hilton Paris Opera Hotel is a 268-room, five-storey freehold deluxe hotel located in the prestigious 8th arrondissement in Paris and enjoys good street frontage.
This hotel is also located in the middle of the iconic Paris CBD shopping area and has easy access to major Parisian tourist attractions and convention centres.
Facilities include four food and beverage outlets, eight conference and meeting rooms, and two leased retail spaces.
The hotel has not only established itself as one of the best full-service hotels in Paris but also achieved a certification for sustainable building performance.
Paris is one of the most attractive cities in Europe and recorded the highest revenue per available room (RevPAR) among key European cities.
In particular, upscale and luxury hotels displayed the sharpest recovery and outperformed 2019 levels back in 2022.
With the upcoming Paris 2024 Olympics, the city is projected to welcome more than 15 million visitors which will bring a strong boost to Hilton Paris Opera Hotel.
So what
This acquisition provides CDL with the opportunity to enhance its hospitality portfolio with a trophy asset and helps it expand its presence in Europe ahead of the 2024 Olympic Games.
CEO Kwek Leng Beng believes that the property will boost the blue-chip group’s recurring income with the potential for value-add.
With this purchase, CDL now operates three hotels with 670 rooms in Paris, with the other two hotels being the 163-room M Social Hotel Paris Opera and the 239-room Millennium Hotel Paris Charles de Gaulle.
As a recap, CDL’s hotel operations saw an 8.5% year-on-year increase in revenue for 2023 to S$1.5 billion.
Excluding divestment gains and impairment losses written back, the division would have enjoyed a 70.6% year on year surge in profit before tax to S$54.6 million.
Now what
CDL is making good progress on its GET strategy, defined as Growth (G), Enhancement (E), and Transformation (T).
For its Transformation arm, the group will engage in capital recycling to maximise returns for investors.
2023 saw the group generate S$632.5 million in sales proceeds amid a bid to restructure its portfolio to unlock value.
Its assets under management (AUM) as of 31 December 2023 stood at S$3 billion.
The plan is to build its AUM via both organic and inorganic growth.
The acquisition of the Hilton Paris Opera Hotel is in line with this objective.
Back in March, CDL submitted a bid for the Jurong Lake District (JLD) master developer site along with four other parties.
If the consortium snags the project, JLD looks set to become Singapore’s largest business district and will be progressively completed over 10 to 15 years.
The mixed-use site, which will comprise offices, residential units, shops, restaurants, hotels, and more, should contribute to CDL’s revenue and earnings progressively.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
