‘Renaissance KL deal likely to be sealed this week’

KUALA LUMPUR (Aug 15): After more than a decade of seeking, property developer cum hotel owner and operator, IGB Corp Bhd, has finally found a buyer for its 910-room Renaissance Kuala Lumpur (pictured), and a sale and purchase agreement for the biggest ever hotel deal is expected to be inked as early as today, sources say.

Details about the deal remains sketchy, but The Edge Financial Daily has learnt that the hotel will likely be sold at RM765 million or RM840,659 per room. The purchasers, believed to be linked to the same people behind Singapore firm Canali Logistics Pte Ltd, has set up a local firm to do the deal.

The ultimate owners of Canali Logistics and the purchasing company is said to be from Bangladesh and connected to S Alam Group. S Alam Group is involved in a large number of businesses including food, cement, steel, power, transport and shipping businesses, and has an annual turnover of US$2 billion (RM8.06 billion).

It is worth noting that the sale of Renaissance KL, should it materialise, follows two other recent hotel sales by the group. In May, IGB concluded the sale of Cititel Express in Jalan Tuanku Abdul Rahman, Kuala Lumpur for RM37 million. The Edge Financial Daily understands that IGB has also recently sold its 183-room MiCasa Hotel Apartment in Yangon, Myanmar, for around US$46 million. IGB has a 65% stake in the hotel.

The Edge Financial Daily was unable to reach IGB Corp over the weekend.

Renaissance KL is owned by Great Union Properties Sdn Bhd, which in turn is owned by IGB Corp (70.48%) and Pacific Land Bhd (29.52%). Pacific Land, meanwhile, is wholly owned by IGB Corp.

The hotel, located at the corner of Jalan Sultan Ismail and Jalan Ampang, is divided into an East Wing and a West Wing. The division was very clear when the hotel was jointly owned with Hong Kong-listed New World Development Co Ltd, as one block was operated as a four-star New World and the other as a five-star Renaissance.

It is understood that the purchase price of RM765 million includes the ongoing renovation at the West Wing at an estimated RM50 million. IGB Corp’s 2015 annual report places the net book value of the property at RM646.12 million, as at Dec 31, 2015. The market value of an asset is usually higher.

Renaissance KL, the largest hotel in Kuala Lumpur based on room inventory, sits on a freehold parcel. It is a 20-year old hotel which is being managed by Marriott International Inc, which owns the brand. The management contract with Marriott is expected to come to an end this December.

During a press conference in late May, IGB’s managing director Datuk Seri Robert Tan Chung Meng suggested that it would be good to put the money from the sale of Renaissance KL into its Mid Valley Southkey Megamall project in Johor and take a smaller loan. This Johor project is a 70-30 joint venture with Selia Pantai Sdn Bhd. The mall, to be built on a 36-acre (14.57ha) parcel, will be the largest shopping mall in Johor with 1.5 million sq ft in net lettable area.

Despite the sale of three hotels recently, IGB Corp is still strong in the hotel business. It operates Cititel Express in Kota Kinabalu, Sabah; Cititel Mid Valley in Kuala Lumpur; Cititel Express Penang; The Wembley Penang; and Cititel Express Ipoh in Perak.

Abroad, the group operates St Giles Heathrow and St Giles London in the UK; St Giles Makati in Manila, the Philippines; The Court and The Tuscany in New York, US; and The Tank Stream in Sydney.

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This story first appeared in TheEdgeProperty.com pullout on Aug 15, 2016, which comes with The Edge Financial Daily every Friday. Download TheEdgeProperty.com pullout here for free.