UEM Sunrise to sell Hyatt House building?

(File pix) Hyatt House Kuala Lumpur, Mont’Kiara was officially launched in December 2018. Pix by Mahzir Mat Isa

By KATHY B. - Published in NST Property, February 28, 2019

IS UEM Sunrise Bhd toying with the idea of selling Hyatt House Kuala Lumpur, Mont’ Kiara?

Rumour has it that there are parties showing interest in four- and five-star hotels in Kuala Lumpur, and they are eyeing Hyatt House, which was officially launched in December last year.

“One of the trends right now is buying or selling hotels or hotel management companies. The demand is coming from existing management companies, investment funds and foreign buyers.

“Foreign buyers see the acquisition of hotels or a hotel management company as a solid way of entering the hotel market in Malaysia. There are some discussions and negotiations taking place in the market, especially for hotels in Kuala Lumpur and Petaling Jaya,” said experts familiar with hotel deals.

“Whether UEM Sunrise will sell Hyatt House highly depends on the offer. On the other hand, for the buyer to be interested in Hyatt House, the hotel must have decent occupancy.

“The hotel maybe three months into its operation but I do believe that its occupancy is quite low currently given the actual shape and size of the expat market here and locals are cutting cost. I think there is a challenge to fill up hotel rooms,” said a market expert.

Hyatt House has 298 guestrooms, comprising 450-sq-ft studios as well as one- and two-bedroom suites of 480 and 750 sq ft, respectively.

The published rate for the studio is RM400 per night, while the suites range from RM450 to RM550 per night.

A UEM Sunrise spokesperson, in an email reply, said the company has yet to receive offers or proposals for Hyatt House.

The spokesperson did not rule out the possibility that the company would sell it should there be proposals.

“The company would evaluate them (the proposals) accordingly and review all aspects of the offer prior to making any decisions or announcements,” the spokesperson said.

The spokeperson did not respond when asked about Hyatt House’s current occupancy rate and the challenges that the hotel is facing.

SALE OF ROYALE CHULAN BUKIT BINTANG

Boustead Holdings Bhd said it is selling Royale Chulan Bukit Bintang in Kuala Lumpur for RM197 million to a Singapore-based company.

This confirmed NST Property’s report last month that Boustead had found a suitor for the four-star hotel.

The group had been seeking bids for the hotel.

Tenders closed on December 31 last year.

Boustead had set a reserve price of RM195million for the four-star property.

In a statement, Boustead said recently that its wholly-owned subsidiary Boustead Hotels & Resorts Sdn Bhd (BHR) had accepted an offer from hotel Royal Ltd for the hotel sale.

Royale Chulan Bukit Bintang offers good prospects, given its strategic location in one of the prime tourist areas and hotel belts of Kuala Lumpur’s city centre, and this could have attracted the buyer.

Singapore media reported that Hotel Royal describes Jalan Bukit Bintang, where the hotel is located as “the Orchard Road of Kuala Lumpur”, and that the purchase is in line with the group’s initiatives to accelerate its growth through acquisitions.

On top of that, the proposed acquisition will “add synergy” to the group’s hotel operations in Kuala Lumpur, where it also owns the 285-room hotel Royal Kuala Lumpur, they reported.

Boustead said the sale price of RM197 million was reached on a willing-seller-willing-buyer basis.

“With this attractive offer price, we are of the view that this is the right time to dispose of the hotel,” said a Boustead spokesperson.

Zerin Properties founder and chief executive officer Previndran Singhe said the price is reflective of the value and the scarcity of such assets on Jalan Bukit Bintang.

“The deal really underpins the keen interest of investors, both local and foreign, in the hospitality sector of Kuala Lumpur,” he told NST Property.

For Boustead, the rationale for the sale is because BHR currently owns two Royale Chulan hotels in Kuala Lumpur, namely Royale Chulan Bukit Bintang and Royale Chulan kuala Lumpur, and they are both within close proximity to and competing with each other.

As such, the group decided to consolidate and focus on Royale Chulan Kuala Lumpur to better capture the Kuala Lumpur market, the spokesperson said.

Boustead said Hotel Royal had paid a sum of RM3.94 million, being the two per cent earnest deposit of the disposal consideration, as part of the terms of the letter of offer.

The letter of offer is subject to, among others, Hotel Royal being granted an exclusivity period of one month starting February 19 to conduct a due diligence exercise on the hotel and BHR refraining from responding to (other than to reject) any enquiries, discussions, proposals or offers for or to continue, propose to, negotiate or hold discussions, and/or enter into any agreements, arrangements or understanding with any other parties during the exclusivity period.

It is also subject to the execution of a conditional sale and purchase agreement by the parties within the exclusivity period and the conditions precedent to the proposed disposal will include the statutory and regulatory approvals required under the Malaysian law and the Singapore stock exchange.

The 21-year-old 400-room Royale Chulan Bukit Bintang sits on a 0.31ha site in the tourist belt of Bukit Bintang.

It is one of eight hotels under Boustead’s hotel portfolio. The other six hotels are Royale Chulan Cherating, Royale Chulan the Curve, Royale Chulan Damansara, Royale Chulan Seremban, Royale Chulan Penang and Royale Chulan Hyde Park, London.