One of Southeast Asia’s largest developers has defied the COVID-19 crisis to sell a hotel property in Shanghai’s Putuo district at a mark-up of nearly 65 percent over its net book value, according to an announcement to the Singapore stock exchange on Friday.
A unit of GuocoLand, which is controlled by Malaysian billionaire Quek Leng Chan’s Hong Leong Company, has agreed to sell the Guoman Hotel on Daduhe Road near Changfeng Park, along with a set of parking spaces, to a subsidiary of Shanghai-based developer Dahua Group for RMB 1.44 billion ($204 million) the statement said.
At the purchase price, Dahua Group is paying a premium of more than RMB 931 million over the 442 room property’s book value as of 31 March of RMB 509.5 million, despite a coronavirus-driven lockdown having halted most travel in China since January. In its statement, GuocoLand said it expects to recognise a net gain of around $64 million on the disposal.
Selling a Western Shanghai Hotel
Along with the 26-storey hotel, Dahua Group, which develops projects in both mainland China and Australia, is also picking up 256 parking spaces in the property. GuocoLand, which developed the hotel as part of the company’s Guosun Centre mixed-use development north of Suzhou Creek in western Shanghai, may also, at its discretion, sell another 44 parking units to Dahua at a consideration of RMB 160,000 each.
Not including the parking facility, Dahua’s payment is equivalent to around RMB 3.26 million per room in the Guoman Hotel.
Dahua sealed the all cash deal by making an initial payment of RMB 288.2 million, with another three instalments set to follow on an unspecified timetable. GuocoLand said that it had already received RMB 1.4 million as earnest money against purchase of the additional parking units, but had not yet committed to following through on that element of the transaction.
The hotel is part of the same Changfeng Eco Business District masterplan as the Guoco Changfeng City office project, which the company plans to complete next year. In its statement GuocoLand said that it would use the proceeds of the transaction for general working capital, including repayment of debt.
Guoco Continues Progress on Putuo Project
GuocoLand’s sale of its Shanghai hospitality asset comes more than a decade after the company opened the five star hotel in July 2010.
The Guoman hotel forms part of the 492,272 square metre Guoson Centre mixed-use development that includes the Guoson Mall, offices for lease and strata-title small office-home office element, along with serviced apartments.
The Guosun Centre complex, along with the Tanjong Pagar Centre in Singapore, Damansara City in Kuala Lumpur, is among GuocoLand’s largest mixed-use developments.