The news of the acquisition agreement broke in July. For Raffles, the sale will return a large amount of capital to its shareholders by way of a special dividend and allow it to retain substantial capital for reinvestment into "higher yielding assets," said company president-chief executive Jennie Chua at that time. Raffles deputy chairman Liew Mun Leong added that while its hotel business is performing well, it is at strategic crossroads.
"To grow the hotel business to gain global scale will entail significant capital investments," she said. "The strong performance of the hotel business combined with the current active M&A market presented a timely opportunity for RHL to realize value in the business it has built over the years... ."
Colony Capital has upward of 19,000 rooms in its portfolio in addition to the 12,000 rooms in the Raffles chain. By comparison, market leaders such as Hilton Hotel Group and Best Western have about 358,000 rooms and 310,000 rooms, respectively.
Raffles executives say Colony Capital's larger global portfolio of hotels will provide an even stronger platform for further growth and development. Colony Capital executives have said they plan to maintain all operations under the current flags and will look for opportunities to selectively grow the franchise, especially in Asia.
The trophy asset in the Raffles portfolio, the 118-year-old Raffles Hotel Singapore. The fabled hotel has been patronized and written about by the likes of Ernest Hemingway, Rudyard Kipling and Somerset Maugham. The hotel was named after the founding father of colonial Singapore, Sir Stamford Raffles. The Raffles portfolio also includes the Swissotel chain. As part of the deal, Raffles Holdings has an option to buy back the lease of the Raffles Hotel in Singapore after 82 years following completion of the sale.
Raffles Holdings holds on to a 45% direct equity interest in Tincel Properties. Tincel owns the Raffles City Complex, a 3.45-million-sf multi-use development that includes two hotels, a convention center and a retail office complex that in 2004 generated a total operating profit of S$96.3 million (US$57.17 million).
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
