Raffles Hotel may change hands again
Preliminary deal for hotel, arcade said to be inked for about $650m
By KALPANA RASHIWALA
(SINGAPORE) Raffles Hotel is believed to be changing hands again, along with its adjoining shopping arcade. The overseas buyer is understood to be a family trust, most likely linked to a European family.
BT understands that a preliminary deal has been inked for the sale and that the price is in the 'mid-$600 million range'. However, the transaction has not been completed yet.
The deal comes with a 40-year management contract for Raffles Hotels & Resorts, which currently manages the hotel, sources say.
The asset is being sold by a unit of Fairmont Raffles Hotels International (FRHI), which is controlled by Saudi Prince Alwaleed bin Talal's Kingdom Hotels International and US-based private equity group Colony Capital.
Colony bought the Raffles Hotel and adjacent shopping arcade as part of the entire hotel business of the then-listed Raffles Holdings in 2005 for a total $1.7 billion.
It later combined these assets with the portfolio of Fairmont Hotels & Resorts following the acquisition of Fairmont by Kingdom Hotels and Colony to create a single hotel enterprise, Fairmont Raffles Hotels International, with more than 85 hotels around the globe under the Raffles, Fairmont and Swissotel brands.
Prince Alwaleed holds the majority stake - believed to be about 60 per cent - in Fairmont Raffles Hotels International, with Colony owning the rest.
BT understands that the Raffles Hotel and shopping arcade were valued at about $200 million in the $1.7 billion portfolio acquired by Colony in 2005.
Raffles Hotel, with 104 suites, is on a 999-year leasehold site while Raffles Hotel Arcade next door is on a site with 99-year leasehold tenure starting Dec 15, 1988.
The hotel, which celebrated its 120th year anniversary in September last year, is gazetted a national monument.
It was built by the Sarkies Brothers in 1887 on the site of a 10-room bungalow.
The hotel expanded quickly and soon became the stuff of legend, mentioned in the works of Somerset Maugham and Joseph Conrad.
In the late 1980s, a massive restoration of the hotel, which has a site area of about 190,000 sq ft, was undertaken.
At the same time, a shopping arcade was built next door on a site with a land area of about 108,000 sq ft.
The three-storey arcade has a built-up area of about 306,750 sq ft. The hotel re- opened in September 1991.
Market watchers reckon that the $650 million or so price tag at which the asset is changing hands under the latest deal reflects not just rising hotel values on the back of increasing hotel room rates over the past two years, but also the highly successful food & beverage concepts Raffles Hotel boasts - such as Doc Cheng's, Tiffin Room, Empire Cafe and Long Bar.
It also has a ballroom and a suite of meeting rooms, plus Jubilee Hall, a Victorian-style theatre playhouse.
Raffles Hotel is understood to have been sold through a privately-conducted competitive bidding process.
Raffles Hotel: The overseas buyer is said to be a family trust likely linked to a European family. The deal comes with a 40-year management contract for Raffles Hotels & Resorts, sources say
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
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EastLiving - Singapore Property and Real Estate DB
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