IOI Properties in exclusive talks for Chijmes, Capitol Kempinski; plans S$6b office fund
IOI Properties Group is in exclusive talks to acquire Singapore's Chijmes and Capitol Kempinski hotel, with due diligence underway. The group also plans a private property fund initially comprising two office assets worth about S$6 billion, targeting a 10% to 11% internal rate of return.
PETALING JAYA (Oct 15): IOI Properties Group Bhd is in exclusive talks to acquire Singapore's Chijmes and the nearby Capitol Kempinski hotel, while planning a private property fund initially comprising office assets valued at about S$6 billion, Bloomberg reported.
Group CEO Lee Yeow Seng told Bloomberg that due diligence on the potential acquisitions was underway, but declined to disclose the purchase consideration, citing ongoing negotiations. The Capitol Kempinski hotel had been marketed for about S$600 million (about RM1.9 billion), Bloomberg reported, citing people familiar with the matter. Chijmes, a heritage retail and dining complex housed in a former Catholic convent in Singapore's civic district, was valued at S$379 million at end-2025. Neither figure represents an agreed purchase consideration for the potential acquisitions.
According to Bloomberg, Singapore-based developer Perennial Holdings controls approximately one-third of Chijmes and 80% of Capitol Singapore, the broader development comprising the hotel, a retail mall and residential units. Other investors include a vehicle backed by an unnamed Southeast Asian sovereign wealth fund. Perennial did not respond to Bloomberg's request for comment.
Lee said IOI Properties was in discussions to introduce high-end fashion retailers at Chijmes to improve its tenant mix and rental income, which he said had been constrained by the complex's concentration of food and beverage outlets. The group also wants to introduce an international ultra-luxury hotel brand to replace Kempinski if the hotel acquisition proceeds, according to Lee.
The potential acquisitions come as IOI Properties seeks to establish a private real estate investment fund to bring outside investors into its Singapore commercial property portfolio. Lee told Bloomberg that the proposed fund was expected to be established within two months and would initially comprise two office assets with a combined value of approximately S$6 billion. These are the office component of South Beach and IOI Central Boulevard Towers, the group's landmark office development in Singapore's central business district.
Former Pimco Prime Real Estate executive Varun Singh has been tapped to oversee the proposed fund. Lee said the group had approached prospective investors, including private equity firms, sovereign wealth funds and insurance companies, but declined to identify them. The fund is targeting an internal rate of return of 10% to 11%, with distributions every six months. Under the proposed structure, IOI Properties intends to reduce its ownership interests in the initial assets to approximately 50%, offering minimum investment holdings of about S$500 million with a five- to seven-year lock-up period.
The group also intends to inject additional Singapore properties into the fund over time, with a longer-term objective of listing the vehicle as a real estate investment trust (REIT). IOI Properties' expansion in Singapore has increased its borrowings, with net debt equivalent to approximately 85% of equity as at end-June, according to Bloomberg. Lee said he aimed to reduce the ratio to between 30% and 50% over the next three to five years.
The group's Singapore acquisitions include buying City Developments Ltd's stake in South Beach to gain full ownership of the development, and purchasing the Asia Square Tower 2 office building. The group is also pursuing other potential acquisitions in the city-state. IOI Properties has jointly submitted an expression of interest with an investment entity managed by CapitaLand Investment Ltd to acquire a 100% interest in One Raffles Place on a proposed 50:50 basis, according to an Oct 12 report on the group's Bursa Malaysia filing. The prospective buyers are undertaking due diligence and exclusive negotiations with the vendors. OUE REIT, the majority owner of the office complex, said on Oct 8 that no binding sale agreement had been executed.
Separately, IOI Properties announced on Oct 1 a conditional agreement to acquire Shenton 101 Pte Ltd, the owner of Shenton House, from Lee, its group chief executive officer and major shareholder, for a nominal consideration of S$1. Under the proposed transaction, the group would also settle S$217.06 million in shareholder advances and consolidate Shenton 101's borrowings of S$376.23 million into its accounts upon completion. Both amounts were stated as at July 31, 2026.
