New World joins hotel spin-offs trend
New World Development has submitted a listing application to the Hong Kong stock exchange to spin off its three hotels in the city, a plan it announced in March.
The firm proposed to list its interests in Grand Hyatt Hong Kong and Renaissance Harbour View Hotel in Wan Chai and Hyatt Regency Hong Kong in Tsim Sha Tsui, with a total of 1,787 rooms.
NW Hotel Investments Group will be structured as an investment trust to own and invest in internationally branded hotels in Hong Kong.
People familiar with the deal say New World plans to raise as much as US$1 billion. Deutsche Bank, HSBC, and JP Morgan are the global sponsors.
New World and its parent firm, Chow Tai Fook Enterprises, will hold a combined interest of at least 50 per cent in NW Hotel Investments upon listing.
New World joint general manager Adrian Cheng Chi-kong said: "We plan to position NW Hotel Investments as our flagship hotel investment vehicle and to develop it over time by offering it opportunities to acquire other high-quality hotels in our portfolio."
Grand Hyatt Hong Kong will be undergoing renovations until 2016. As the hotel's operations and financial performance may be hurt, New World and Chow Tai Fook - to provide income security to unit holders - will guarantee that the distributions payable for the financial year to the end of June 2014 will not be less than an amount to be finalised.
They will also offer a top-up payment to the trustee-manager, NW Hotel Investments, for the years ending June 2015 and 2016.
Bankers said the spin-off trend among local property companies was sparked by the strong demand for listings as trusts of defensive properties.
A Singapore listing of Mapletree Great China Commercial Trust raised US$1.3 billion in March - the city state's largest initial public offering since Hutchison Port Holding Trust raised US$5.5 billion in March 2011.