HK group buys Crown Hotel for $300m
Price paid by Park Hotel reflects net yield of 5%

Crown Hotel has a new owner in the Park Hotel Group of Hong Kong, which paid $300 million for the 311-room freehold property on Orchard Road.

The price seems high as it works out to $947,000 per room, which is at least double the estimated value some investment advisers have placed for a four-star hotel on Orchard Road.

However, Park Hotel Group chairman Raymond Law described the price as reasonable as it reflects a net yield of 5 per cent based on the hotel's existing operations. And he has plans to upgrade the hotel and its 44,300 sq ft retail area in phases while keeping the hotel open all the time. Market watchers say that the new owner is likely to increase the retail space in the property to improve yields on the asset.

And Crown Hotel could also be highly sought after in future if the owners of neighbouring properties like 268 Orchard Road and Wellington Building seek to redevelop their assets. It would make more sense for these building owners to team up with the owner of Crown Hotel for a bigger redevelopment scheme that may qualify for additional gross floor area, say property industry observers.

Mr Law told BT yesterday that he plans to continue operating the hotel and is not looking to tearing it down for redevelopment. Park Hotel Group will take over the management of Crown Hotel, which will be renamed to reflect its new owner, in about six months. 'All staff will be retained,' Mr Law added.

He said the acquisition of Crown Hotel is his group's first investment here. Besides owning and managing the 421-room Park Hotel in Tsim Sha Tsui, Hong Kong, the group is scouting for opportunities to operate and manage hotels in Shanghai, Beijing and Macau. The privately held group, controlled by Mr Law and his two siblings, is also involved in property development in Hong Kong. Park Hotel is buying Crown Hotel free of debt, according to Mr Law.

The property was sold by Forward Investment, with support from Farallon Capital Management LLC and Noonday Asset Management LLP which last year took over the first mortgagee's loan of $180 million which had been extended to Forward by OCBC Bank and Great Eastern Life. Farallon and Noonday representatives have since taken control of Forward's board, say sources.

JLL Hotels said the tender for Crown Hotel, which closed last Friday, drew 'exceptionally strong interest' from both established local investors and international parties. - 9 June 2005

Crown Hotel put on the market again for $325m

Five months after its sale was suspended, the former Crown Prince Hotel is on the block again - this time, the Orchard Road property will be going for a minimum of $325 million.

Tender for the property, which changed its name to Crown Hotel At Orchard at the beginning of the year, will close on June 3.

Last October, about 15 interested parties had indicated offer prices of up to $250 million.

Jones Lang LaSalle Hotels, the financial adviser to the owner of Crown Hotel, Forward Investment, said it is confident that the property will sell this time.

'There were a lot of disappointed people the last time round when the sale was pulled, so we're pretty sure the same names will come back,' said Craig Collins, executive vice-president of Jones Lang LaSalle Hotels.

The hotel is managed by Crown Management International, which is controlled by the Sulistyo family of Indonesia.

The Sulistyos also control Forward Investment, whose sole asset is the choice freehold hotel property on the corner of Orchard and Bideford roads.

Forward Investment had owed a total of about $250 million to Great Eastern Life, OCBC and a consortium of banks led by HSBC, and had put the hotel on sale in August last year.

Farallon Capital Management and Noonday Asset Management then stepped in to take over the $180 million of debt which OCBC Bank and Great Eastern Life had extended to Forward.

Farallon and Noonday are now the only mortgage holders on the property, Jones Lang said.

However, Forward still owes about $70 million to a syndicate led by HSBC for a loan to a paper mill in Shandong, China, which has gone into default.

The hotel has a site area of 34,176 sq ft and an existing gross floor area of 251,970 sq ft, and can be developed by expanding the retail space in the hotel.

'The asset could potentially be upgraded and repositioned as a branded product operated by an international hotel chain, which should enable it to achieve a better trading profile,' Mr Collins said.   - by Jean Chua      SINGAPORE BUSINESS TIMES    15 Apr 2005

Crown Prince Hotel up for sale by tender
Prime location, upgrading potential expected to attract investors

Expressions of interest will close on Oct 8 and short-listed candidates will be invited to take part in a tender that is expected to close around mid-November.

The hotel's owner, Forward Investment, owes a total of about $250 million to Great Eastern, OCBC and a consortium of banks led by HSBC.

This amount is higher than the $230 million reported earlier, due mainly to accumulated interest that Forward owes to the HSBC-led consortium, BT learnt yesterday.

JLL Hotels refused to comment yesterday on the freehold property's current valuation or price expectations.

The property has a site area of 34,176 sq ft and an existing gross floor area of 251,970 sq ft spread over the hotel, its food and beverage outlets, function rooms and prime shop space fronting Orchard Road.

The hotel has 330 guest rooms, although 19 have been shut.

Whilst the property currently generates a very strong cashflow, the hotel guest rooms and food and beverage areas have tremendous potential to be upgraded and repositioned to further enhance the hotel's profitability.

'The property's retail space may potentially be expanded to capitalise on its prime location fronting one of Singapore's busiest pedestrian intersections. The hotel also presents a re-branding opportunity,' said JLL Hotels' executive vice-president Craig Collins.

'The sale offers investors a rare opportunity to purchase a substantial freehold hotel on Orchard Road, as assets of this quality in Singapore are generally very tightly held. We expect to receive strong interest from local, regional and international investors,' he added.

Last weekend, BT reported that Goh Cheng Liang's Wuthelam Group sold the 408-room Hotel New Otani on River Valley Road to a Lehman Brothers real estate fund for about $84 million. The deal was brokered by DTZ Debenham Tie Leung. - - By Kalpana Rashiwala    SINGAPORE BUISNESS TIMES    25 Aug 2004

Crown Prince Hotel up for sale

The 20-year-old Crown Prince Hotel in Orchard Road is up for sale as its owners have been placed in receivership.

Owner Forward Investment owes Great Eastern, OCBC Bank and an HSBC-led consortium about $230 million, The Business Times reported earlier this month.

Analysts say the 11-storey, 311-room hotel at the junction of Orchard and Bideford roads is likely to fetch between $230 million and $250 million.

The sale is likely to be keenly contested because it is rare to find a freehold property in such a prime location, they say.

Property consultancy Jones Lang LaSalle has been appointed the agent for the sale, which will be done via expressions of interest.

The executive vice-president of Jones Lang LaSalle Hotels, Mr Craig Collins, told The Straits Times that 'numerous domestic and international groups', including investors, hotel owner-operators, domestic and regional developers and opportunity funds, have expressed interest in the property.

The hotel stands on 34,000 sq ft of freehold land and has a floor area of about 248,000 sq ft, of which 43,000 sq ft is retail space.

Mr Collins said in a statement: 'While the property currently generates a very strong cash flow, the hotel guest rooms and food and beverage areas have tremendous potential to be upgraded and repositioned to further enhance its profitability.'

Chesterton International's associate director, Mr Nicholas Mak, agreed, noting that buyers of the currently four-star hotel may, for example, decide to upgrade the building and ramp it up to five-star status.

Just last week, it was reported that Hotel New Otani was sold to a Lehman Brothers real estate fund for about $84 million. The sale is expected to be completed by Sept 30. - by Tan Hui Yee    SINGAPORE STRAITS TIMES     23 Aug 2004

Crown Prince Hotel owner in receivership

(SINGAPORE) Forward Investment, owner of the freehold Crown Prince Hotel in Orchard Road, has been placed in receivership. 

The company owes Great Eastern, OCBC and an HSBC-led consortium a total of about $230 million. 

Ong Yew Huat and S Rajagopalan of Ernst & Young were appointed receivers and managers for Forward by OCBC Bank earlier this week. 

Forward is owned by the Sulistyo family from Surabaya, which also used to control Fort Canning Country Club. 

The company's sole business is the ownership and management of the freehold Crown Prince at the corner of Orchard and Bideford roads. The asset has 330 rooms - although 19 have been shut - and about 45,000 sq ft of retail space in an 11-storey building with two basements. 

Forward is said to have received offers for the asset of between $220 million and $250 million in the past year from property funds and hotel owners in Singapore and the region. So far no deal has materialised, partly because the Sulistyos may have wanted to retain a stake in the hotel, sources say. But at these price levels, potential buyers would want full ownership, they add. 

Confirming his appointment as receiver for Forward, Ernst & Young's Mr Ong told Business Times yesterday: 'We are in the process of appointing a property consultant to find a buyer for Crown Prince Hotel. I must stress, however, that if the borrower (Forward Investment) at any point in time finds a solution, we can accept this and it may then not be necessary for a sale of the asset. 

'The hotel's problems stem from its financial structuring. The business of the hotel is actually doing well, with an occupancy of about 90 per cent over the past few months and average room rate of $130 a night. It's business as usual at the hotel and we'll continue with full operations, including accepting bookings for all functions from now until the busy period at the end of the year.' 

Market watchers say the Sulistyos have landed in the current situation because they have over-leveraged on the asset over the years. 

Forward owes Great Eastern $85 million and its parent OCBC, $95 million. The two have the first charge on the asset. 

Forward's only other major creditor is an unsecured one - a consortium led by HSBC. The bank syndicated a loan to a paper mill in Shandong, China, for US$40 million, and Forward provided a guarantee for about 70 per cent of the loan, which has gone into default. Forward's share of the guarantee works out to about S$50 million. 

The HSBC-led consortium, being unsecured creditors, will only get their dues after GE and OCBC have been paid. Business Times understands that OCBC has been patient with Forward, giving it leeway to find a solution over the past two years. Forward had planned to securitise the hotel in early 2002 to raise funds to pay its debts. But this didn't take off. 

Two property consultants contacted by Business Times yesterday estimated the hotel's value at about $230 million. Four-star hotels in Orchard Road are estimated to be worth about $350,000 to $400,000 per room.     If Crown Prince's 330 rooms are valued at $375,000 each, the hotel's total room inventory would be worth about $124 million. 

Crown Prince's retail component is let to such tenants as Hello, Swensen's, Poh Heng Jewellery, a family KTV set-up and a Japanese restaurant. Sources estimate the retail space could be worth about $106 million. This would bring the total value of the property to $230 million. 

The hotel opened in 1984 and had addition and alteration works done from 1996 to 1998. Its existing gross floor area (GFA) exceeds what would be allowed under the current Master Plan, which leaves little redevelopment potential. 

Crown Prince's current GFA is 251,970 sq ft, or about 7.37 times its freehold site area of 34,176 sq ft.    

The site is currently zoned for commercial use with 4.9 plot ratio (ratio of maximum GFA to site area) and height of up to 20 storeys.  However, an analyst said some potential buyers may see a redevelopment angle for the asset if the authorities allow a new commercial and residential project to be built up to the existing GFA. In such an instance, a $230 million price works out to a land price of about $913 psf per plot ratio, which could still be viable, said a consultant. 

Potential buyers who are looking to retain the existing property may still find scope to extract more value from it. One way would be to decant space from the building's upper levels to lower floors, which tend to fetch higher retail rents. 'And they could carve out some of the existing shop units from basement two to level two into smaller units and change the tenancy mix to extract higher rents,' suggested a property consultant    - By Kalpana Rashiwala      SINGAPORE BUSINESS TIMES    5 Aug 2004

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