FIC’s Kuching hotel may be sold at a loss

PETALING JAYA (June 2): A four-star hotel in Kuching, Sarawak, acquired by Felda Investment Corp Sdn Bhd (FIC) at an inflated price may have to be sold at a loss, reported The Edge weekly.

The corporation had started inviting bids for Merdeka Palace Hotel and Suites – located at Jalan Tun Abang Haji Openg and Jalan McDougall, opposite Padang Merdeka – and is understood to have not set a reserve price for the asset.

The property was revealed to have been bought at an inflated price in 2014, according to documents seized Malaysian Anti-Corruption Commission while it was investigating FIC’s investment into a London property, reported The Edge weekly.

The corporation had paid RM160 million for the 213-room hotel, which works out to RM751,713 per room.

In comparison, Aloft Kuala Lumpur at Kuala Lumpur Sentral was sold for RM870,000 per room while the 540-room DoubleTree by Hilton Hotel near KLCC was sold for RM718,518 per room, said a real estate agent.

“You can’t get these prices in Sarawak. Kuching is not a tourism hub,” said the agent.

According to The Edge, RM110 million – or RM516,000 per room – is a widely-reported figure deemed a more accurate price tag for the property.

However, another real estate agent said even that price is too expensive for Kuching.

One agent who specialises in hospitality opined that the property has potential to improve.

“For a decently run hotel in Kuching, the average price per room would be between RM400,000 and RM500,000. Merdeka Palace was poorly managed previously and is in need of a lot of investment to make it more competitive.

“Overall, it is an attractive asset as it offers a great turnaround opportunity. The new professional team seems capable of making the hotel a success. So, if given time, I think the hotel will do well.”

FIC’s wholly-owned subsidiary FIC Kuching Property Sdn Bhd has been granted the business license to operate the hotel.

In its financial year ended Dec 30, 2015, FIC Kuching had recorded a net loss of RM221,835 against revenue of RM5.85 million.

The 21-storey hotel has a total gross floor area of 457,623 sq ft while its facilities include a restaurant, café, retail shop, pub and wine section, whisky and cigars section, swimming pool, function rooms and banquet halls.

The land is registered under FIC, which is owned by the Felda.

According to documents sighted by the weekly, Savills (M) Sdn Bhd had been hired as the exclusive adviser of the asset, which has 834 years left on the lease.