Track2Realty-Agencies:

In a filing to the BSE, DLF said the sale of the hotels and resorts under the Aman Resorts brand does not include the Delhi property.

“DLF Global Hospitality Ltd (DGHL), 100 per cent step-down subsidiary of DLF, and Adrian Zecha, the founder and Chairman of the Aman Resorts Group of luxury resorts, are pleased to announce the signing of a definitive agreement to effect Zecha’s Management Buy-Out (MBO) of DGHL’s 100 per cent shareholding in Silverlink Resorts Ltd, the holding company for Aman Resorts.

“The value of the MBO is at an enterprise value of approximately USD 300 million and it does not include the Aman New Delhi property (Lodhi Hotel), which shall be retained by DLF Ltd,” the National Capital-based realty major said.

The transaction is slated for final closure by February-end next year that is subject to “usual closing conditions”, it added.

Aman Resorts has about 25 properties across the world.

DLF has a debt of Rs 21,200 crore and the company has recently said that it is targeting to reduce it to Rs 18,000 crore by the end of this fiscal from sale of two big non-core businesses — Aman Resorts and wind energy.

The company had put on block for sale of three big-ticket non-core assets, which included a prime 17-acre plot in Mumbai, Aman Resorts and its wind-energy business.

Track2Realty-Agencies:

In a filing to the BSE, the Mumbai-based DB Realty said that DB Hospitality Pvt Ltd (DBHPL), in which the company is holding stake, proposes to develop a plot as the Delhi International Airport’s new hospitality district through one of its subsidiary SPV.

“… in order to develop the said project, DBHPL has been exploring various options including dilution of stake in the said SPV and for the purpose talks have been going on with various parties and the same shall be intimated as and when the deal is finalised,” DB Realty said.

D B Realty’s share price today went up by nearly 10 per cent to close at Rs 125.20 on BSE amid reports that Bharti Group’s realty arm is eyeing stake in this SPV.

DB Hospitality has about 8 acre of land near airport.

DB Realty, however, said that it is not selling Hilton Hotel in Mumbai and Grand Hyatt property in Goa.

Both Hilton Hotel (Mumbai) and Grand Hyatt (Goa) are being operated through the subsidiaries of DBHPL, it added.

Meanwhile, Bharti Group spokesperson declined to comment on report that its arm Bharti Realty is buying stake in DB Realty’s hospitality project in the national capital.

Earlier this year, the Indian Hotels Company Limited (IHCL), the company which operates the Taj chain of luxury hotels, has sought an extension of the Collaboration Agreement and License Deed for its property.

After almost a two-hour meeting here on Thursday, Sep 27, the New Delhi Municipal Council (NDMC) decided to give the Tata Group’s, Indian Hotels Company, an extension. It also decided to conduct an open auction within a year.

The Taj Group will get the first right of refusal, but will have to match the highest bidder.

Karan Singh Tanwar (BJP), Council Member, said, “The Council members passed this by majority but not unanimously. I had protested and said that the Council should conduct the auction within two months.” He added that the extended period was in favour of the Taj Group and even the provision of first rights of refusal was not part of the original terms and condition.

The extension to Tatas to run the property for a year though will help NDMC as it will not lose revenues in the interim period of finding a new operator for the hotel.

The Taj Group has been running the luxury hotel for 33 years and had got a one-year extension last year. The property is owned by NDMC.

The hotel, situated on Mansingh Road in New Delhi area, is being operated under an agreement between IHCL and NDMC. The Tata-owned IHCL had entered into a 33-year lease on a revenue share model for using the property in 1978.

This premium property has been attracting attention of some of the other eminent players such as Oberoi, ITC and Sahara, besides a host of other international major given the strategic location right in the heart of Lutyens Delhi.

The year could see an otherwise perceived as a conservative Group, the Tatas getting aggressive, to retain the property when put on auction, especially since its clear now that they will get the first right of refusal.

According to sources, Taj Hotels will pay 17.25 per cent of its gross revenues as fees to NDMC for this extended period. Earlier, it was paying 10.5 per cent of its gross revenues for the 33-year-old lease period.

NDMC had appointed Ernst & Young to advise the Council on its future course of action. A legal opinion was also sought and Additional Solicitor General Rakesh Kumar Khanna had said that the Council should go for an open auction for maximisation of revenues.

“The entire gamut of real estate financing will be discussed. In an earlier meeting with bankers, the finance minister had expressed concern over real estate developers not bringing prices down despite slowdown in sales,” said a source requesting anonymity. Following the Finance Minister’s concern, a committee of bankers was set up to study the issues in the real estate sector.

The panel, headed by Ajai Kumar, Chairman and Managing Director of Corporation Bank, is expected to give its report by month-end. Mittal will also attend the meeting of the sub-committee of the Financial Stability and Development Council (FSDC) at the Reserve Bank of India (RBI). The sub-committee is headed by RBI Governor, D Subbarao, in which all financial sector regulators are members. RBI deputy governors also attend the FSDC sub-committee meetings.

Bank credit to commercial real estate has slowed considerably in the last one year. It contracted 1.8 per cent during April-July against 4.4 per cent growth in the comparable period of the previous year. Growth has also slowed on a year-on-year basis, as loan growth to this sector was a mere 2.2 per cent for the year till July, compared with 18.6 per cent growth a year ago.

Similarly, home loan growth has slowed, latest data from RBI showed. During April-July, home loan growth was 3.1 per cent against 4.5 per cent last year. According to bankers, the high interest environment has slowed home loans significantly. The finance ministry under P Chidambaram has taken steps to correct the situation. In a meeting with bankers in August, shortly after Chidambaram took charge, bankers were asked to boost consumer loan demand by lowering interest rates. Following the meeting, most banks had reduced interest on home and automobile loan demand.

Bankers have said the meeting assumes significant following the big-bang reform announcements last week, which exhibit the government’s intention to boost the faltering economic growth. Last week, the government opened the floodgate for foreign direct investment in multi-brand retail and aviation and increased the price of diesel, despite stiff opposition from some of its own allies.

The government is also keen to see interest rate become conducive to support economic growth.

All eyes will be on RBI tomorrow, when the mid-quarter policy review is scheduled. The central bank has not reduced the interest rate in the last two policy meetings, citing high inflation and lack of the government’s intention to correct fiscal and current account deficits.

The twin deficit also put upward pressure on inflation, the central bank had said. After increasing diesel price and relaxing the FDI norms, the government has shown its intention to control the twin deficits.

The owner of Oasis, Beny Alagem, had approached Sahara to sell 55% stake in the iconic hotel for about $340 million (Rs 1,900 crore), sources close to the development said.

Sahara group Chairman Subrata Roy confirmed that his group was in talks without divulging any further details.

“They had approached us sometime ago and we are in negotiations.”

Oasis was not immediately available for comment. Sahara Group’s external communication agency did not respond to emailed queries sent by Track2Realty seeking information on the talks.

The Sahara Group last month bought a majority stake in New York’s iconic Plaza Hotel for Rs 3,200 crore, the second iconic property it has purchased in recent years. In 2010 it acquired the Grosvenor Hotel in London. Oasis has been scouting for an equity partner to fund expansion plans since 2011, after Alagem abandoned an earlier plan to sell the hotel for about $500 million.

Oasis plans to add a 170-room, five-star hotel and a 150-condos residential tower to the nine-acre property. The proposed hotel block, a source said, would be managed by US-based Hilton Hotels  and named The Waldorf Astoria.

The 57-year-old Beverly Hilton, on the intersection of Wilshire and Santa Monica boulevards, hosts about 175 red carpet events every year, including the Golden Globe Awards. It was also in the news recently after singer Whitney Houston was found dead in one of its suites last February.

The Sahara chief, however, did not disclose how he planned to fund the acquisition of the 570-room property in Beverly Hills.

Israeli businessman Yitzhak Tshuva, who controls the Elad Group, has sold his 60 percent stake in the Plaza Hotel, a report in the Israeli daily newspaper Haaretz said.

The Elad Group, which is Tshuva’s private real estate arm in North America, signed the deal on Monday to sell its share in the hotel and commercial center to Subroto Roy-led Sahara Group for USD 570 million, it added.

Tshuva had bought the 105-year-old Plaza in 2004 from a group of investors headed by Saudi prince Alwaleed bin Talal for USD 675 million, the newspaper said.

He invested a total of a billion dollars in the renovation of the Plaza, which has 182 luxury apartments, a hotel, condominiums and commercial space.

Elad would see a free cash flow of USD 220 million from the deal, which will help it pay off the more than USD 500 million it owes to bondholders in Israel as well as allowing it to make new investments.

The hotel, which overlooks New York’s Central Park, is jointly owned by Elad Properties and Saudi-based Kingdom Holdings.

Elad would receive 1.6 billion shekels for its 60 percent stake, while Kingdom will receive the rest.

Kingdom, the investment vehicle owned by Talal, will hold a 25 percent stake in the hotel once the deal is complete.

Udi Erez, the chief executive of the Elad Group and the chairman of Elad Canada, had said in an interview to the New York Times early last month that the group was close to sealing a deal with Sahara for the Plaza Hotel.

He had said the deal will be valued at about USD 575 million dollars.

Erez had said it was his recommendation to sell Elad’s stake in the Plaza since the return on investment for the hotel and the condo hotel was low.

“It’s fine to sit on a property like that. And I’m sure it’s going only one way ? up ? because of the hotel, the location, the name and the history. But still for me we’re going to have more than USD 200 million net cash flow from this deal. We can use that money in this economy,” he had said in the interview.

]]> http://www.track2realty.com/sahara-buys-controlling-stake-in-new-yorks-plaza-hotel/feed/ 0 http://www.track2realty.com/potential-and-roadblocks-co-exist-for-hotels-iv/ http://www.track2realty.com/potential-and-roadblocks-co-exist-for-hotels-iv/#comments Thu, 12 Jul 2012 04:52:35 +0000 Track2Realty http://www.track2realty.com/?p=6626 By: Ravi Sinha

Track2Realty Exclusive

Industry experts assert it is difficult to put a time frame on certain requirements like getting over a 100 government permits from the time of starting construction to completion. Historically, hotel construction in India has been somewhat cumbersome owing to the multiple clearances/approvals required from Central and State Government agencies. These clearances/approvals differ from state to state and in some cases, as many as 110 licenses are required by hotel projects. It often leads to a price escalation of about 15%.

Support from the government to revive and develop the hospitality industry has come in the form of certain policy changes. While in the past, policies such as declassifying hotels from within Commercial Real Estate (CRE), relaxation in the External Commercial Borrowing (ECB) norms, and investment-linked tax deduction for establishing new hotels of two-star category and above have been implemented; in December 2010, the Union Cabinet approved setting up of a ‘Hospitality Development and Promotion Board’ (HDPB).

India, with a population of more than 1 billion, has only about 104,000 rooms, according to Government estimates. In comparison, New York City alone has more than 80,000 rooms. Demand for hotel rooms far outstrips supply in India, and this has attracted global players like Starwood Hotels & Resorts, Marriot International, Hyatt Hotels, InterContinental Hotels and Accor Hospitality.

Analysts say in a few years competition could jump to levels that could put pressure on Indian firms’ room rates as they face-off with global giants, but will still manage to grow on rising demand for rooms in Asia’s third-biggest economy.

India requires investments worth 600 billion rupees over the next five years to cope with the unmet demand for about 150,000 rooms, according to FICCI-Evalueserve.

Track2Realty Exclusive

The Indian strategy in the hospitality segment seems to be borne out of the demand-supply market dynamics. An industry survey estimates that the three major Indian metropolitan areas—Bangalore, Mumbai and Delhi—command some of the highest hotel rentals in the world.

The study, conducted by Indusview Advisors, found that Bangalore had the world’s highest room rentals, averaging about $500, with Mumbai ($400- 450) coming in a notch lower and Delhi ranking third at $350 plus.

Internationally, London hotels charge $300-450 while star properties in Moscow and Rome charge $260-350 and $140-350 respectively. While the situation is acute even in traditional high-cost cities such as New York where room rates spiraled up 15.4 percent last year to an average of $320.87, according to an American Express report some of the strongest surges have been in Asia.

The Indian hotel room market for 10 metros is estimated to expand at a compounded annual growth rate (CAGR) of 17% to Rs. 11,900 crore during 2010-13, according to a study by Knight Frank India. In terms of the number of rooms sought per day, the hospitality sector is estimated to grow at a CAGR of 10.3%. But at 15% growth during the period, supply is expected to surpass demand. A total of 24,211, 8,709 and 3,057 additional rooms are expected to become operational by 2013 across upscale, midscale and economy category hotels, respectively, the study said.

However, if growth prospects are driving the sector, there are roadblocks at policy and macro economic level that threaten to derail the growth. Many leading hospitality companies looking at expansion are either deferring launches or stalling projects on the back of various challenges including fund crunch and hassles in getting permits.

According to a study by consulting firm HVS, the hospitality companies had announced to add 90,000 rooms by April 2015. Realistically, industry experts say, only two-thirds of the figure will materialise by then. Of the rest, some will get delayed and others shelved.

…..to be continued

Track2Realty Exclusive

The operational inexperience of the developers’ is also being sewn up through strategic tie-ups with the majors in the hotel industry. An improving economic scenario and demand for more hotel rooms across categories is persuading international hotel chains to sign new management contracts with Indian developers and property owners, according to analysts. The industry will witness the announcement of a number of new hotels in the year ahead.

“Renewed interest shown by landowners and developers towards the hospitality sector is attracting hotel groups to get into partnerships,” said Shreenath Shastry, National Director (Hospitality) at consultancy firm Knight Frank India. “However, luxury brands will mostly come to projects coming up in the metro cities. Tier II and III cities will witness signing of contracts with mostly domestic hotel chains.”

Research by HVS suggests that compared to other comparable major cities around the world, the major cities in India have a considerably lower number of branded/quality rooms supply. The current total supply of approximately 71,500 rooms in the country is significantly lower than that for other countries. Therefore, even with the addition of 61,396 branded/quality rooms across India in the next five years, India offers huge potential to investors and operators across all segments.

Nearly 50% rooms branded hotels plan to add in the next five years will be in the mid-market and budget segments, a trend somewhat similar to what is seen in the Indian airline industry. Investors are comfortable in putting in money in budget hotels and many leading international brands are planning to enter this space in India. At least for some, no-frills hotels will be a new market altogether.

“India has a huge market for budget and mid-market hotels. We are comfortable with investing in mid-market hotels in India,” said Ashish Jakhanwalal, Managing Director and Chief Executive Officer at Samhi Hotels, a hotel investment and development company. “We are raising $100 million (Rs.440.6 crore today) for investing in hotel properties and this will be largely in mid-market hotels.”

..…to be continued

Track2Realty Exclusive

Some developers believe in the age when everybody is constantly looking forward to upgrade, luxury residences should not be seen just in the premium super category. As a matter of fact, Purvankara has successfully initiated the concept of luxury affordable as well. According to him there is no dearth of buyers; rather the challenge is for the developers to execute a luxe living.

“Luxury projects can be executed in various categories provided there is a R&D (Reasearch & Development) done on the prospective buyers’ needs. In our projects we have created amenities like even the Pet’s Corner on public demand. So, for us luxury projects are not just about exclusive living, but to balance the individual needs vis-à-vis the community needs. Today in a place like Bangalore, where the bar timings are restricted, you need to create your bar-b-que space in luxury living. Similarly, in the overcrowded cities you need cricket training academies for children within the projects,” says Jackbastian Nazareth, CEO of Bangalore-based Purvankara Group.

As a matter of fact, experiment with luxury living is being experimented across India, not just with the housing but across the asset class. For instance, Vigneshwara Developers has launched SOHO (Smart Office Home Office) that offers a combination of the comfort of home with the present-day needs of office, all under one roof. The futuristic stride “SOHO”, seeks to redefine how business space can be made into a smart blend of working and living at one place.

Sunil Dahiya, Managing Director of Vigneshwara Developers says, “Equipped with high-end technological equipment, elegant décor and all that goes in the name of comfortable living, SOHO comes with a 3G (Third Generation) experience, which includes tele-presence, virtual office and access to helipad. A rare blend of office-cum-home, SOHO will bring comfort and quality to life, offering added services like laundry, house-keeping and room service, along with recreational facilities. Providing for living and working in a zone of comfort and convenience, the concept of SOHO is bound to emerge as a necessity in times to come. For, it meets the needs of tomorrow at today’s cost.”

Industry observers also agree that there is a huge hunger line for the luxury housing across the product portfolio. However, the discerning buyers of today is making sure that they will not merely allow charging premium, over and above the peaked prices, claiming that the project is a luxury project, and hence costs more. Even swimming pools and gymnasiums nowadays fall into basic necessities and not luxury. Creating exclusive neighbourhood, exclusive amenities and overall “WOW” factor is what will further drive the luxury living in future.

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