UOL Group walks away from HK$3b Hyatt Regency Hong Kong Tsim Sha Tsui deal
Singapore-listed UOL Group has abandoned talks to buy the Hyatt Regency Hong Kong Tsim Sha Tsui from New World Development and the Abu Dhabi Investment Authority, scuttling what would have been Hong Kong's biggest hotel deal this year. The HK$3 billion (S$382 million) transaction for the 381-key pro
Singapore-listed UOL Group has walked away from discussions to buy the Hyatt Regency Hong Kong Tsim Sha Tsui from New World Development and the Abu Dhabi Investment Authority (ADIA), according to market sources. The deal, valued at HK$3 billion (S$382 million), would have been Hong Kong's biggest hotel purchase this year. It was said to have been in due diligence in late September but stalled last month.
Brokers are now showing the 381-key property at 18 Hanoi Road to alternative buyers. The 22-storey hotel opened in 2009 inside a mixed-use tower that also houses the K11 Art Mall and The Masterpiece luxury residences, a two-minute walk from East Tsim Sha Tsui MTR station. At HK$3 billion, the failed talks valued the hotel at roughly HK$7.9 million per key, nearly three times the HK$2.21 million per key in the recent HK$2.7 billion sale of the Sheraton Hong Kong Tung Chung Hotel and the Four Points by Sheraton near the airport.
New World and ADIA have spent more than three years trying to sell the Hyatt Regency as part of a portfolio of three hotels. ADIA acquired its 50 per cent stake in June 2015 as part of a joint venture with New World and Chow Tai Fook Enterprises that also took matching stakes in the Grand Hyatt Hong Kong and the Renaissance Hong Kong Harbour View Hotel. That deal valued the three-hotel portfolio at HK$18.5 billion and the Hyatt Regency alone at HK$3.39 billion. Chow Tai Fook Enterprises sold out to New World later that year. Had the Hyatt Regency sold at HK$3 billion, ADIA would have incurred around a 13 per cent loss on the property over its 11 years of ownership, according to Dan Voellm, CEO and founder of AP Hospitality Advisors.
The aborted transaction leaves UOL, which owns a portfolio of 26 hospitality properties through its Pan Pacific Hotel Group unit, without a presence in Hong Kong. UOL and New World had not responded to requests for comment by the time of publication. ADIA declined to comment.
The attempt to sell the Hyatt Regency is part of New World's ongoing effort to shore up liquidity as the developer works down HK$126.3 billion in net debt. Net debt swelled HK$6.2 billion and gearing climbed to 68.3 per cent from 58.1 per cent in its latest fiscal year up to the end of June. A debt swap organised by New World to defer some of its liabilities came in below target last month, with investors tendering US$189.3 million of securities by the final 20 October deadline against a US$600 million cap.
In late September, New World agreed to pay HK$2.3 billion to surrender the 11 Skies commercial project to Airport Authority Hong Kong, shedding decades of financial commitments. The company has announced disposals of Ningbo and Hangzhou commercial assets for more than RMB 1.7 billion (US$253 million). Its proposed Shanghai commercial REIT, backed by the Hong Kong New World Tower complex on Huaihai Road, is expected to generate RMB 3.2 billion in net proceeds. The group reported a HK$26.8 billion loss for the last fiscal year, including HK$14.7 billion in non-cash impairments from the airport exit. Recurring net profit, which excludes impairments and provisions, improved to HK$2.2 billion from a HK$1.2 billion loss a year earlier.
