UOL diversification plans to buoy profits despite tough local market

It inked a deal with UIC to acquire third UK property.

With moderation in Singapore property market and strong competition for land-banking expected to persist, OCBC Investment Research firm views UOL's strong focus on diversification and strengthening the group’s recurring income streams positive.

UOL announced that a newly incorporated JV, United Venture Investments (HI) Pte. Ltd (UVIHI), has entered into a sales and purchase agreement to acquire for GBP229.6m a freehold 9-storey mixed used building located at 120 Holborn, Midtown London, UK.

The asset is located in Farringdon, London and is within walking distance to Chancery Lane Tube Station, Farringdon Tube Station interchange and the upcoming Cross Rail. The site area is approximately 113,256 sq ft with a net lettable area of 349,088 sq ft comprising 197,226 sq ft and 151,862 sq ft of office and retail space, respectively.

UVIHI is a 50:50 JV between UOL Ventures Pte Ltd, which is a wholly-owned subsidiary of UOL, and UIC Overseas Investments Ptd Ltd., a subsidiary of United Industrial Corporation Ltd.

A deposit of GBP22.96m has been paid and the balance of the purchase price will be paid on the completion of the transaction on 10 Nov 2016.

This is the group’s third acquisition in the UK

"We believe this is a decent price for an asset in an vicinity that UOL knows well," commented OCBC Investment Research.

According to the brokerage firm, the group’s hotel segment continues to be a key source of recurring income and, looking forward, management expects to expand the footprint of its hospitality segment and will complete the extension of rooms at the ParkRoyal Parramatta in Sydney to 268 rooms.

A hotel management agreement for a Pan Pacific hotel in Beijing, China has also been signed.