KUALA LUMPUR: Malayan United Industries Bhd (MUI) has officially taken Corus Hotel Hyde Park in London off the market due to bad timing, says group chairman and chief executive officer Andrew Khoo Boo Yeow.
"We feel it is not an appropriate time to sell. The group's view is that a trophy asset in a prime location in Central London will always hold its value, particularly in the long term," Khoo told the New Straits Times.
He added that the group was open to selling the hotel at the right price.
MUI has owned the 389-bedroom hotel since 1997. It bought the property for £44 million.
The hotel is set in a listed 200-year-old Georgian mansion near Lancaster Gate, central London.
It was reported in 2014 that MUI was looking to sell the hotel for £200 million (RM1.07 billion) but the group denied this.
There was news again on the hotel sale after the UK media saw a "for sale" sign over the property and this time MUI confirmed the report in a filing with Bursa Malaysia in May last year..
MUI said it was seeking to sell the hotel, which is in line with the group's strategy to rationalise the business, pare down its overall bank borrowings, and unlock value for its shareholders.
The group said its indirect wholly-owned unit Corus Hotels Ltd (CHL) had appointed N.M. Rothschild & Sons Ltd to explore strategic options for the asset and to ensure that only credible international investors are shortlisted.
The sale of Corus Hotel Hyde Park could have resulted in a gain on disposal of over RM800 million in MUI's profit or loss statement, based on the hotel's net book value of RM256.47 million as at June 30, 2018.
Khoo said MUI would spend £20.38 million to refurbish and renovate the four-star London property, which will raise its value.
MUI, via its indirect unit Plaza On Hyde Park Ltd, has secured two term-loan facilities totalling £100 million (RM539.3 million).
"Prior to Covid-19 the hotel was achieving record numbers in terms of Ebitda (earnings before interest, taxation, depreciation and amortisation) performance.
"With the overall decline in travel numbers this is an opportunity for us to use the downtime to upgrade the hotel. This will enhance the overall value and performance of the hotel, especially when business gets back to normal," he said.
For the six months ended December 31, 2019, MUI recorded a lower revenue of RM205.3 million and a loss of RM11.3 million compared to a revenue of RM213.8 million and pre-tax profit of RM12.3 million the year before.
MUI has businesses in hotel operation, retailing, food, property development and investment.
Revenue for the hotel division fell by 4.2 per cent to record RM92.1 million compared to the preceding quarter, mainly due to lower room occupancy and average room rate from the hotels in the UK.
Despite the lower revenue, the division's pre-tax profit increased 3.7 per cent to RM12.74 million.
MUI has five hotels in London and two in Malaysia.
Each asset has its own market valuation but total the portfolio was worth around £235 million collectively, said Khoo.