Thursday, May 16, 2013

Banyan Tree may spin off S-E Asia hotels into Reit


The Straits Times  |  16 May 2013
RESORTS group Banyan Tree may spin off its hotels in South- east Asia into a real estate investment trust (Reit) after the hospitality Reit industry matures further, said executive chairman Ho Kwon Ping yesterday.

RESORTS group Banyan Tree may spin off its hotels in South- east Asia into a real estate investment trust (Reit) after the hospitality Reit industry matures further, said executive chairman Ho Kwon Ping yesterday.

"What we think is going to happen in a few years' time is that there will be appetite for a Reit of our kind, which will be hotels that would not necessarily be in Singapore or Hong Kong but diversified and within the region," said Mr Ho, speaking on the sidelines of the firm's first-quarter results briefing at Fullerton Hotel.

"That's what we're looking towards... (these) are the type of assets we have."

He said Banyan Tree's sale and leaseback of the Angsana Velavaru resort in the Maldives to CDL Hospitality Trusts (CDLHT) in January signalled the growth of more South-east Asian hospitality Reits that include resorts.

"There's increasing appetite for a higher risk exposure now," noted Mr Ho, adding that Banyan made the deal with CDLHT as it wanted to see how large the investment appetite was for a "much more emerging-market" hospitality Reit.

The $86.8 million sale of the Maldives resort boosted Banyan Tree's first-quarter earnings. Net profit for the three months to March 31 climbed 19 per cent to $14.2 million on the back of a 17 per cent increase in revenue to $96.9 million year on year.

The company said this was due to a strong showing from its hotel investments, particularly those in Thailand. Turnover from the segment jumped 30 per cent to $70.1 million in the first quarter compared with the same period last year.

This offset a 43 per cent drop in property sales revenue to $3.6 million from the preceding year.

Banyan sold 58 homes, worth $15.4 million in all, in its Laguna Shores project in Phuket in the quarter. The company has sold 125 of the 229 units in the development's $58 million first phase.

Earnings per share rose from 1.58 cents to 1.87 cents for the quarter; net asset value per share came in at 77 cents, up from 72 cents as at Dec 31.

Laguna Shores is the first development under a new brand that Banyan Tree will launch in the middle of this year. Mr Ho told The Straits Times in an interview at the firm's Upper Bukit Timah premises last week that the brand aims to capture the rise of a "younger, more lifestyle-oriented" middle class. He said he wanted to "dispel the notion that Banyan Tree will only do luxury".

Laguna Shores has one- and two-bedders of 40 sq m to 88 sq m and costing 4.2 million baht (S$175,000) to 10.2 million baht.

Most of the buyers are couples in their mid-30s to 40s, with Singaporeans making up a percentage "in the mid-teens".

Mr Ho was upbeat about the Thai property market, saying real estate was less volatile than tourism. Laguna Shores' $28 million second phase with 105 homes will make its Singapore debut this weekend at The Fairmont Singapore.

*****************Background Story *****************

POTENTIAL APPETITE

What we think is going to happen in a few years' time is that there will be appetite for a Reit of our kind, which will be hotels that would not necessarily be in Singapore or Hong Kong but diversified and within the region.

- Banyan Tree executive chairman Ho Kwon Ping


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