KUALA LUMPUR, March 15 — Boustead Holdings Bhd (BHB), which is disposing of the Royale Chulan Bukit Bintang Hotel in Kuala Lumpur to Singapore-listed Hotel Royal Ltd for RM197 million in cash, expects to realise an estimated gain of RM92 million on the exercise’s completion.
In a filing with Bursa Malaysia today, BHB said this translated into about 4.5 sen per share.
BHB’s indirect subsidiary, Boustead Hotels & Resorts Sdn Bhd, today inked an agreement to sell the 418-room four-star hotel to Hotel Royal’s subsidiary Every Room A Home Sdn Bhd.
A spokesperson from BHB said in a statement today that the disposal of this property formed part of the Boustead group’s overall plan to return to profitability by way of divesting non-strategic assets.
The hotel, located on Jalan Conlay, is facing increased competition within the Golden Triangle of Kuala Lumpur as well as online platforms such as Airbnb. This resulted in its relatively low occupancy rate of 52 per cent in 2018 versus the average occupancy rate of hotels within the Klang Valley of about 74 per cent, BHB said.
The company said that a refurbishment exercise would also be needed for the ageing property to remain attractive and competitive.
Weighing the prospects of maintaining the hotel, the sale offers greater value to the group.
The prime location of the Royale Chulan Bukit Bintang Hotel enabled the group to dispose of the hotel at a premium over the net book value, BHB said.
The proposed disposal is, however, conditional on, among others, the buyer obtaining the approval of the Economic Planning Unit of the Prime Minister’s Department of Malaysia and the approval of the Federal Territory of Kuala Lumpur Land Executive Committee as well as completing all conditions and listing requirements imposed by the Singapore Exchange Securities Trading Ltd.
The proposed sale is expected to be completed by July 2019. — Bernama
