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Singapore-listed Mandarin Oriental International has decided not to proceed with the sale of The Excelsior hotel in Hong Kong as none of the bids recently received had fully met its expectations or transaction requirements.
“As the proposals have not provided the basis for the sale of the property at the current time, the company is continuing to review all options, including those that may result in redevelopment of the property into a commercial building,” it said in an SGX filing on Wednesday (27 September).
Colliers International deputy managing director Vincent Cheung told Bloomberg that potential buyers from mainland China may be unwilling to fork out HK$30 billion (S$5.16 billion) for a building in Causeway Bay, outside of Hong Kong’s central business district. This is the rumored quantum acceptable to Mandarin Oriental even though it didn’t name a specific asking price.
He estimates that the four-star hotel is worth between HK$25 billion (S$4.3 billion) and HK$27 billion (S$4.65 billion).
Cheung also revealed that there were speculations that Sun Hung Kai Properties would purchase the property as it owns the adjacent World Trade Center. However, combining the two complexes into one would require “huge” renovation costs and it would be difficult to a get a good rental yield.
After Mandarin Oriental’s announcement discontinuing the sale, its share plunged by a record 32 percent on Wednesday.
Previously, its stock price surged 86 percent through Tuesday (26 September) after it said in June that it is considering a sale of The Excelsior given “current strong commercial property valuations in Hong Kong” and the authorities have approved the redevelopment of the hotel site for a commercial building with a gross floor area of 684,000 sq ft.
A member of the Jardine Matheson Group, Mandarin Oriental operates eight residences and 30 hotels across 20 countries and territories. All hotels are five star except for The Excelsior.
Photo: Google Maps
This article was edited by Keshia Faculin.
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