Millennium & Copthorne Hotels, the hospitality subsidiary of City Developments, is mulling offers for at least three of its properties, as part of its overall review of the business. It expects to conclude at least one such sale in 2021.
In line with the practice of its parent company, the value of the assets, acquired over the years, have not been revalued to market.
“M&C recognises that while capital values of many properties have increased even amid the u uncertainty, return on equity of such assets (from hospitality revenue and profits) is not likely to recover to pre-Covid-19 levels in the near term,” the company says.
CDL built up its hospitality business over the last 25 years by acquiring entire portfolios, such as the Copthorne chain in
1995 and the Regal chain in 1999, as well as individual properties.
If and when the sales go through, M&C’s global room inventory of over 40,000 at the 2019 will be reduced. “But the revised footprint and inventory will sharpen focus and conserve human and financial resources to position M&C better for recovery from as early as 2021,” the company adds.
“Hotels which can return to sustained levels of profitability may also be seeded for acquisition by CDLHT,” says M&C, referring to the separately-listed hospitality trust controlled by CDL.
See: City Developments a promising investment amid a smidgen 1.3% increase in FY2019 earnings, say analysts
In January this year, CDLHT unitholders approved the acquisition of W Singapore – Sentosa Cove hotel from CDL at a valuation of $324 million.
The following month, M&C completed the $49 million (£27.6 million) sale of Millennium Cincinnati and recorded a gain on disposal of $26.4 million (£14.3 million).
“M&C is strengthening its foundations to prepare for a recovery in hotel operations from as early as 2021,” says Lee Richards, vice-president operations, South East Asia, Millennium Hotels and Resorts.
“Our product has been refined to offer new revenue streams. We have improved processes, cost structure and digital marketing, amongst other efforts, as we prepare for improvements in business sentiment and confidence to travel,” he adds.
“By streamlining our global portfolio in line with the strategy of our parent, M&C will emerge stronger and better positioned to benefit from a post-Covid-19 environment,” says Richards.
M&C has observed “green shoots” of improvements in its occupancy rates and gross operating profit in the current second half of the year, and expects the improvements to gain momentum going into 2021.
London-headquartered M&C used to be separately listed in London before it was privatised on Nov 19 last year at a valuation of £2.23 billion ($3.96 billion).
