BIZ BUZZ: Global hotel brand mulls over PH exit
It’s still a buyer’s market out there in the local property scene, and several skyscrapers—including those in the Makati central business district—are up for grabs.
For instance, this luxury hotel (not the one that you’ve already read about) that is part of a well-established global chain still has about 14 years more of leasehold to go.
But because of a global deleveraging, despite its enviable location in this part of the world, exiting the Philippines has become an option.
“They had issued bonds and it’s very expensive. They’ve got 10 to 12-percent (per annum) cost of money,” a well-placed source from the property industry told Biz Buzz.
“Their global portfolio is affected. They built a lot of condo units in Hong Kong. They built a lot of hotels in China. Those are impacted heavily, so they want to look at selling assets to help pay down some of their debt.”
However, the only Philippine asset that they can sell is their hotel building, because the land is owned by the Ayala group.
“So if you don’t own the land and you only have 14 years left and you need to invest and fix the place, they (investors) don’t want that.”
Because there isn’t enough time in the leasehold terms to recoup their prospective investment, our sources say the most likely buyer will thus be Ayala Land Inc., which can eventually include this as part of their redevelopment plan, similar to how Hotel Intercontinental Manila had been knocked down (as will be decades-old Dusit Thani Manila in a few years) to give way to a new development.
If and when a deal is made, if Ayala isn’t in a hurry to redevelop this area, it can just bring in another hotel brand to take over operations.
In any case, it gives Ayala a chance to recover this valuable property, and plan something new, ahead of the original lease expiration.
