BLand introduces long-stay units in Kyoto Four Seasons project

KUALA LUMPUR: Berjaya Land Bhd (BLand), a subsidiary of Berjaya Corp Bhd (BCorp), plans to include 56 long-stay units in its flagship development in Japan, which currently features the 123-room Four Seasons Hotel Kyoto, to lower its capital commitment and ensure better return on investment.

Its executive director Leong Wy Joon told The Edge Financial Daily last Friday that most hotel developments now come with a component that is for sale.

“It also makes sense to do this (long-stay units) since the portion for sale can leverage on the brand name of the hotel and thus command a premium on its pricing,” he added.

BLand had initially planned to offer only hotel accommodation at Four Seasons Hotel Kyoto, which has a gross development value (GDV) of US$320 million (RM1.05 billion), when it first inked the agreement with Four Seasons Hotel Kyoto in September 2012.

The GDV has since been revised upwards by 38.3% to US$411.1 million, taking into account the 56 long-stay units.

Earlier, at a press conference after the signing ceremony between BLand and Taisei Corp of Japan for the construction contract as well as the loan agreement with Mizuho Bank & RHB Bank Bhd for the Four Seasons Hotel Kyoto development, Leong said the change in the hotel opening date was due to “some delays in the negotiations of the loan agreement as it is a cross-border transaction”.

The hotel, which has a built-up area of 34,725 sq m and situated on a 5-acre (2.02ha) site in Kyoto, was originally slated to open in early 2015.

However, BCorp chairman and chief executive officer Datuk Robin Tan said in his speech that the hotel is scheduled for completion in December 2015 and will start operating towards the end of spring in 2016.

Leong said the group targets to achieve an occupancy rate of 70% when the hotel opens in 2016.

“In line with what (the existing) The Ritz-Carlton Kyoto is charging now on an average basis, room rates at Four Seasons Hotel Kyoto are expected to start at ¥55,000 (RM1,750) per night and increase to between ¥70,000 and ¥75,000 a night in three years,” he added.

Meanwhile, the loan amount of US$160 million to be provided by Mizuho Bank and backed by a standby letter of credit from RHB Bank, surpasses the project’s contract value of US$110 million by US$50 million.

On this, Leong said the contract value is only for the base building including fit outs for the standard room. He added that the loan is for five years from its first roll-out.

“There will be another contract that will cover the fit outs for the long-stay units. That will come up to another US$60 million,” he said, adding the total construction cost would be about US$170 million.

He added that the extra US$60 million will be funded by internal funds.

Four Seasons Hotel Kyoto is BLand’s third major project in North Asia, after the RM9.92 billion Berjaya Jeju Resort in Jeju, South Korea and the RM7.5 billion Great Mall of China project in Beijing, China.

Leong says the group targets to achieve an occupancy rate of 70% when the hotel opens in 2016.

This article first appeared in The Edge Financial Daily, on March 31, 2014.