Lai Sun venture nets HK$800m from sale

PUBLISHED : Thursday, 24 May, 2007, 12:00am
UPDATED : Thursday, 24 May, 2007, 12:00am

Lai Sun Development and its partner will together earn more than HK$800 million from the sale of the Majestic Hotel and a shopping complex in Jordan, according to the co-owner.

Industry sources believe the buyer of the hotel is LaSalle Hotels.

Lai Sun, which has a 50 per cent stake in the hotel and shopping complex, said in an announcement that its 50-50 joint venture, Taiwa, had signed a sale and purchase agreement to sell the hotel and shopping centre for HK$1.69 billion.

The price was 15 per cent below the owners' HK$2 billion asking prices, the sources said.

Co-owner Francis Choi Chi-ming said he and Lai Sun would each pocket HK$400 million from the deal.

A Lai Sun executive said the firm would generate a disposal gain of 'several hundred million dollars'.

In 2004, toy magnate Mr Choi paid HK$435 million for a 50 per cent stake in the hotel from Lai Sun when the listed developer was forced to dispose of assets to reduce debt.

Mr Choi said that the agreed HK$1.69 billion sale figure was a good price.

Lai Sun shares rose 1.79 per cent to close at 28.5 HK cents yesterday, while eSun Holdings, which holds 36.72 per cent of Lai Sun, rose 0.48 per cent to HK$6.33.

Mr Choi declined to name the purchaser, identifying it only as a foreign fund.

'The new owner will renovate the hotel later in order to increase the room rate per night by about 20 per cent to 30 per cent,' he said.

Built in 1992, the 380-room Majestic has an occupancy rate of more than 90 per cent.

Sources said the hotel and the retail complex would generate an annual rental income of about HK$200 million.

The price tag for the 15-storey Majestic Hotel and the 60,000-sq-ft retail complex below it represented an accommodation value of about HK$6,000 per square foot, surveyors said.

Two weeks ago, a private investor paid HK$231 million, or HK$6,000 per square foot, for the 100-room Mayfair Garden Hotel in Jordan.