Stamford Land to sell Auckland hotel to Albert Street Hotel for NZ$170m

Yong Jun Yuan
Published Mon, Oct 10, 2022 · 08:06 PM

STAMFORD Land Corporation : H07 0% will divest both the Stamford Plaza Auckland hotel property in New Zealand as well as the business and business assets of its operator, SPAK (1996) for a total consideration of NZ$170 million (S$137.5 million).

The property purchaser, Albert Street Hotel, will buy the property for NZ$152 million while the business purchaser, Albert Street Operations, will acquire the business and business assets for NZ$18 million.

In a bourse filing on Friday (Oct 10), the company said that it decided to dispose of the hotel and its associated businesses as the property sale price is 8.5 per cent higher than the valuation. A recent valuation commissioned by the company valued the property at NZ$140.2 million.

As at Mar 31, 2022, the book value and net tangible asset (NTA) value of the property as well as the associated business and business assets stood at S$48.5 million and S$18,000 respectively.

Net profit from the disposal of the business and business assets is estimated to be NZ$18 million after considering the value attributable to the business and business assets as at Mar 31, 2022.

If the transaction had been completed on Mar 31 this year, the company’s NTA per share would rise to S$0.60, from S$0.54. If the transaction had been completed on April 1 last year, the earnings per share of the company would have risen to S$0.1081, from S$0.0356.

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Furthermore, the company noted, the potential re-investment of net sale proceeds for the proposed transactions is about 18 per cent higher than the potential yield from continued operations of the hotel for the year ended Mar 31, 2023.

Stamford Land said that net sale proceeds from the transaction will be used to fund future acquisitions and investments, as well as the paying down of loans to mitigate the impact of rising interest rates on the company.

In addition, the company noted, the projected gross operating profit of the hotel for its FY2023 is estimated to be about 50 per cent below pre-Covid levels and is not expected to recover in the near future.

The net profit attributable to the hotel before tax for the year ended Mar 31, 2022 stood at S$18 million, after taking into account the financial performance of the property, business and business assets.

“The proposed property disposal would enable the group to realise the value of the property, reduce holding costs, improve the liquidity of the group – a position that would be in the best interests of the group given the current uncertain global economic climate,” the company said.

Stamford Land also said that the property sale price is subject to adjustments on the completion date in accordance with the sale and purchase agreement, which was derived at arm’s length on a willing buyer, willing seller basis.

The property will be paid for in two tranches, the first of which will be a sum of NZ$10 million paid to the property seller Stamford Auckland (1996)’s solicitors. A second tranche of NZ$142 million will be paid for 60 days from the date of the sale and purchase agreement in cleared funds.

The business and business assets of NZ$18 million will be paid for on the completion date in cleared funds.

The company also said that it has received prior approval from Singapore Exchange Securities Trading to waive the need for shareholders to vote on the deal as the property is a non-core asset of the company.

This comes after the company confirmed on Sep 23 that it had sold an upscale hotel in Sydney for A$210.5 million (S$197.3 million).

Stamford Land closed down 4.1 per cent or S$0.015 at S$0.355 before the announcement was made.

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