Rajawali Group set to exit Sheraton Imperial KL after 15 years

A 33-storey building in Jalan Sultan Ismail has been put up for sale by Indonesian billionaire Tan Sri Peter Sondakh.

The Edge reports that the newly renovated five-star Sheraton Imperial Kuala Lumpur and the Faber Imperial office tower are estimated by industry sources to fetch RM450 million to RM500 million.

Owned by Inter Heritage (M) Sdn Bhd, in which Sondakh’s Rajawali Group owns a 51% stake through Eagle High Properties Pte, with the remaining 49% owned by the world’s largest hotel chain, US-based Marriott International, via Granton International Ltd. 

The Sheraton Imperial comprises 398 rooms and 138,000 sq ft of office space for rent, located directly opposite Quill City Mall, just a five-minute walk from the Medan Tunku monorail station.

The publication cites industry sources who say the owners had been looking to appoint an exclusive agent earlier this year and had hired real estate firm Knight Frank. 

A two-minute video on YouTube uploaded May 6, to advertise the sale states that the integrated hotel-cum-office building offers a “rare opportunity to acquire an excellent property”.

Reasons for the sale are potentially a combination of factors such as continued losses sustained by the property, a glut of office space in the capital, and increasing competition in the hotel space from newer hotels as well as alternative accommodation providers like Airbnb.

The publication cites industry observers who say the sale may signal the possible exit of the Rajawali Group due to recent reported events, where the Federal Land Development Authority had lodged a police report, saying it had been cheated into signing a one-sided transaction in its purchase of PT Eagle High Plantations Tbk from the Rajawali Group.

In the latest available financials submitted to the Companies Commission of Malaysia, for the financial year ended Dec 31, 2017 (FY2017), the hotel recorded revenue of RM73.02 million but chalked up a net loss of RM3.87 million.

Revenue over the past five years has ranged from RM72 million to RM76 million.

Total liabilities as at end-FY2017 amounted to RM206.17 million, RM26.25 million of which were current, while accumulated losses stood at RM162.49 million.

The building sits on 76,564 sq ft of freehold land and was completed in 1997. 

In end 2018 the higher floors which house the hotel underwent extensive renovations. The lower floors house Faber Imperial Court, which is also known as the Sheraton Imperial Tower. The occupancy rate is over 70%. 

Kings College, accounting and advisory firm SJ Grant Thornton, The High Commission of Sri Lanka, Japanese firms Shimizu Corp and Taisei Corp, Tourism Australia and Rajawali Corp are listed as tenants on the website.