Archive | Millennium and Copthorne

Scottish fund manager lifts stakes in Millennium & Copthorne and CDL

Published 7 September 2018
Scottish investment manager Aberdeen Standard Investments Ltd has lifted its stake in 2 NZX-listed companies controlled by the Hong Leong Group of Singapore – to 13.24% for its stake in Millennium & Copthorne Hotels NZ Ltd and 8.38% in CDL Investments NZ Ltd.

Aberdeen Standard previously held 12.9% of hotel owner & operator Millennium & Copthorne and 7.45% of residential property developer CDL.

The increases are disclosed in advice of a name change for Aberdeen Standard’s Asia subsidiary. Aberdeen Standard itself is the result of a merger last year between Aberdeen Asset Managers plc, headquartered in Aberdeen, and Standard Life Investments plc, of Edinburgh.

Millennium & Copthorne Hotels NZ Ltd is a 75.78%-owned (last year 75.2%) subsidiary of Millennium & Copthorne Hotels plc in the UK and CDL is 75.8% owned by Millennium & Copthorne Hotels NZ. The ultimate parent company is Hong Leong Investment Holdings Pte Ltd in Singapore, with 70.2% ownership.

In other Aberdeen Standard news this week, the investment manager said it had agreed 2 deals for its Pan-European Residential Property Fund for a total investment of €120 million. Aberdeen Standard launched the fund in March after raising an initial €355 million, and now has a portfolio of 610 apartments in operation or being developed in Denmark, Austria & France.

Aberdeen Standard had total investments of €629.9 billion at 30 June.

Aberdeen Standard

Attribution: Aberdeen Standard releases.

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Hotelier lifts profit 24%

Hotel owner-operator Millennium & Copthorne Hotels NZ Ltd lifted net profit 24.4% in the June half-year to $39.6 million, on revenue up 22.5% to $127.5 million).

The NZX-listed company is a 75.78%-owned (last year 75.2%) subsidiary of Millennium & Copthorne Hotels plc in the UK. The ultimate parent company is Hong Leong Investment Holdings Pte Ltd in Singapore.

Financial highlights (unaudited; June 2017 half in brackets):

Revenue up 22.5% to $127.506 million ($104.101 million)
Gross profit up 24.6% to $77.656 million ($62.326 million)
Pretax profit up 24.5% to $54.664 million ($43.912 million)
Net profit up 24.4% to $39.621 million ($31.841 million)
Net tangible asset backing up 20.2% to 384.34c (319.68c)
Basic & diluted earnings/share up % to 24.4% to 19.05c (15.32c)
Equity up 20.1% to $689.181 million ($573.864 million)
Reserves up 83.5% to $224.858 million ($122.555 million)

NZ hotel operations:

Revenue from the New Zealand hotel operations (14 owned or leased & operated hotels (excluding 5 franchised & 2 managed hotels) up 24.5% to $64.27 million ($51.63 million)
Revpar (revenue:available room) up 13.2% to $133.12 ($117.63)
Occupancy for the owned & leased hotels 83.2% (81.3%)

Steady tourism market but concern at new entrants

Millennium & Copthorne chair Colin Sim said on Thursday the results reflected the steady tourism market in New Zealand plus contributions from M Social Auckland & the Millennium Hotel New Plymouth Waterfront, and growth in section sales from subsidiary CDL Investments NZ Ltd.

Managing director BK Chiu said the commercial accommodation market had become more competitive over the last 2 years with the entry of several traditional & non-traditional suppliers.

“However, we are confident of our competitive position as we focus on the demand side of the equation in selected market segments & the guest experience.”

Mr Chiu said the judicial review brought by several Auckland hotel owner-operators against Auckland Council in relation to the bed tax (accommodation provider targeted rate) was likely to be heard in 2019, so it wouldn’t have any material impact on the company’s full 2018 results. The review seeks to rescind the bed tax on the basis of unfairness & lack of consultation by Auckland Council.

Looking at the remainder of this year, the board expected both the hotel & residential section sales operations to better the company’s 2017 performance in 2018.
In Australia, occupancy at the Zenith Residences at King’s Cross in Sydney was steady at 88.5%. Apartment units are now being put up for sale as the leases expire and one apartment was sold in the first half of 2018.

Related story today: CDL lifts profit by 25% despite big spend on new land

Attribution: Company release.

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Shareholder puts resolution questioning hotel company dividends

Minority shareholders in NZX-listed Millennium & Copthorne Hotels NZ Ltd have the opportunity to poke a stick at the majority controlling interest in the company at the annual meeting next Thursday, 31 May.

But, as 71% of the ordinary shares & 86% of the redeemable preference shares are held by Hong Leong in Singapore through CDL Hotels Holdings NZ Ltd (via Millennium & Copthorne Hotels plc in London), the minority is not going to win any argument.

Still, the opportunity to offer an opinion on dividends has been presented by a resolution proposed by one shareholder, Howard Zingel, of Tauranga, who argued that Millennium & Copthorne pays a low dividend ratio compared to the wider market.

Looking back over the 26 years since Hong Leong bought the shells of 2 high-fliers brought to earth in the 1987 sharemarket crash, Euro-National Corp Ltd & Kupe Group Ltd, and turned them into (initially) CDL Hotels NZ Ltd & CDL Investments NZ Ltd, lower than average dividends have always been a feature.

In his notice of motion supporting a special dividend – plus bonuses for staff & directors in recognition of their contribution to the company’s recent performance – Mr Zingel says: “Company statistics vary considerably; nevertheless market commentators give a median P:E (price:earnings ratio) of 17.5 to the NZ sharemarket. More simply, the number of years it would take for earnings/share in cents to equal the current share price.

“At a share price of 285c & historic earnings of 27.25c/share, the Millennium & Copthorne P:E ratio is 10.5. A lower than median ratio means investors generally rate the share poorly. The greater the deviation to the median, the more poorly viewed.

“A significant issue for Millennium & Copthorne is the low dividend payout, most easily measured by the times dividend ratio. In the case of Millennium & Copthorne it is 4.5 times against a market norm of less than 2. In other words, our dividend is less than half what investors would normally expect.

“It is acknowledged there are many considerations which go to make investor opinion. Earnings quality & transparency amongst many.

“Millennium & Copthorne is in a sweet spot and the chairman is promising a swift move towards modern governance. In this felicitous state, shareholders require an enhanced dividend and at the same time wish to share the good fortune with other stakeholders.”

Ironically, both Hong Leong’s NZX-listed subsidiaries bumped their dividends up for the 2017 financial year, announcing a 20% increase for Millennium & Copthorne, from 5c to 6c, share, and CDL a 16.6% increase, from 3c to 3.5c/share.

Even so, the Millennium & Copthorne board hasn’t supported another rise, or the bonuses. It wrote in response, in the notice of meeting:

The company says no

The company response was: “The board believes that the company should maintain sufficient cash & other financial resources to ensure that it is able to meet its current & future requirements. This year, Millennium & Copthorne acquired the Millennium Hotel New Plymouth Waterfront and the company is looking to expand its network within New Zealand with suitable properties provided that they meet its investment criteria.

“The board therefore does not consider it is an appropriate time to pay a special dividend and these payments would impose a significant cost on the company. The board also believes that price:equity ratio (PE) is only one metric that may be considered in relation to a company’s dividend policy & performance. Millennium & Copthorne’s policy is to pay shareholders a percentage of net profit after tax, with the current percentage being around 25-30%. The dividend paid out has increased by over 4 times since 2013.”

In relation to the directors’ remuneration, the board said the pool for directors’ fees hadn’t been increased since 1996, but would be reviewed “in the near future”.

In any case, the board noted that, if somehow Mr Zingel’s resolution is passed, it wouldn’t be binding on the board.

The 2 Hong Leong companies will hold their annual meetings at the transformed former Copthorne HarbourCity Hotel, now M Social Auckland, on Quay St – CDL at 10am, Millennium & Copthorne at 2pm.

Earlier stories:
9 February 2018: Hotelier lifts earnings, bumps up dividend
9 February 2018: CDL lifts dividend on 19% profit rise

Attribution: Company notice of meeting.

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4 reasons for doubling of Millennium & Copthorne profit

Millennium & Copthorne Hotels NZ Ltd cited 4 reasons this week for doubling its profit for the June half – higher accommodation demand, better hotel productivity, far more section sales by 67%-owned CDL Investments Ltd and an earthquake insurance settlement.

Millennium & Copthorne increased profit after-tax & non-controlling interests by 98% to $23.79 million ($12.01 million). Profit before income tax & non-controlling interests rose 102% to $41.08 million ($20.38 million).

Singaporean company Hong Leong Investment Holdings Pte Ltd owns 75% of Millennium & Copthorne NZ and 67% of CDL through Millennium & Copthorne. Wong Hong Ren, a senior Hong Leong executive who chairs both NZX-listed companies, said the hotel group’s capital expenditure investments, revenue management initiatives & improvements to its overall costs of doing business all helped deliver this half-year result.

The company recognised a $4.31 million one-off gain from the final insurance settlement relating to the Millennium Hotel Christchurch, completing settlement of all matters relating to the 2010 & 2011 earthquakes.

Group revenue and other income increased 36.8% to $95.71 million ($69.95 million), gross profit by 35.1% to $53.04 million ($39.26 million), earnings/share by 98.1% to 15.04c/share (7.59c/share).

Mr Wong said the New Zealand hotel operations (13 owned or leased & operated hotels, excluding 5 franchised one managed hotel) continued to perform strongly and their revenue increased 5.5% to $47.15 million ($44.68 million). Occupancy for those owned & leased hotels increased to 82.3% (78.2%). Revpar (revenue per available room) increased by 14.7% to $108.72 ($94.75).

CDL Investments lifted its after-tax operating profit by 87% to $15.95 million ($8.51 million) on section sales up from 128 in the first half last year to 171.

Mr Wong said occupancy at the Zenith Residences, at King’s Cross in Sydney, was steady at 97%. Litigation involving the property settled in the last few weeks, and Mr Wong said the company expected the owners’ corporation would start remediation of the balconies soon.

Earlier & related stories:
5 August 2016: Section sales boost CDL return
20 June 2016: Rendezvous hotel to become Grand Millennium

Attribution: Company release.

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Rendezvous hotel to become Grand Millennium

Millennium & Copthorne Hotels NZ Ltd will take over the lease on the Rendezvous Grand Auckland Hotel in September, and its name will change to the Grand Millennium Auckland.

The change results from expiry on 6 September of the lease on the Mayoral Drive hotel to Rendezvous Hotels (NZ) Ltd, which was the tenant when 2 stapled members of the Hong Leong Group of Singapore, the CDL hospitality trusts, bought the hotel from the Abacus Property Group in 2006 for $113 million. Its latest valuation, at December 2015, was $117 million.

Hong Leong owns 70% of Millennium & Copthorne NZ. The NZX-listed company’s chair, Wong Hong Ren, also chairs the Singapore-listed trusts and group executive Vincent Yeo was a director of the NZX-listed company until December 2015 and is an executive director of the trusts. London-listed Millennium & Copthorne Hotels plc indirectly holds the interest in the New Zealand company and is the controlling stapled securityholder of the Singapore trusts.

The Grand Millennium’s lease is for 3 years, plus 2 3-year renewals. The rent is to be the equivalent of the hotel net operating profit, subject to an annual base rent of $6 million excluding gst. The tenant will retain earnings from a fee structure that includes management, franchise & incentive fees.

Millennium & Copthorne managing director BK Chiu said the lease had been negotiated on an arm’s length basis and on normal commercial terms through a tender process.

The hotel, the largest in New Zealand with 452 guestrooms, will be the first Grand Millennium in New Zealand. Others are in Beijing, Shanghai, Al Wahda, Amman, Dubai, Muscat, Sulaimani & Kuala Lumpur. It has 1619m² of conference space, including an 830m² ballroom.

An impression of the MSocial – the name of the Copthorne HarbourCity when it reopens next year.

An impression of the MSocial – the name of the Copthorne HarbourCity when it reopens next year.

Millennium & Copthorne’s Auckland waterfront hotel, the Copthorne HarbourCity, will become the MSocial Auckland when it reopens next year after a full refurbishment & seismic upgrade.

Link: CDL hospitality trusts

Earlier stories:
1 February 2010: CDL Singapore trust buys 5 Australian hotels
1 November 2006: Abacus sells ex-Carlton to new CDL Singapore trust

Attribution: Company release.

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Propbd on Q W16Dec15 – listeds: hotels exit franchise, Highbrook deal finalised, PFI lift, Zara coming to NZ, Rainbow tick, Eastgate leases

2 hotels sold out of Millennium & Copthorne franchise
Goodman completes 2012 Highbrook acquisition
PFI gets 5% valuation lift
Zara the next big name for Sylvia Park
Fletcher Building scores the Rainbow tick
3 Eastgate lease agreements go unconditional

2 hotels sold out of Millennium & Copthorne franchise

Millennium & Copthorne Hotels NZ Ltd said yesterday its franchise & management arrangements for the Kingsgate Hotel Hamilton & Kingsgate Hotel Whangarei would end in 5-7 weeks. Managing director BK Chiu said: “Both of these have been owned by the Butcher family, who have been Millennium & Copthorne’s franchise partners for over 18 years. The family made the decision that the time was now right for them to sell the hotels and agreement has been reached with a new owner.

Therefore, Millennium & Copthorne will no longer represent these hotels at the conclusion of the respective franchise agreements on 25 January for Kingsgate Hotel Whangarei and 11 February for Kingsgate Hotel Hamilton.”

Goodman completes 2012 Highbrook acquisition

NZX-listed Goodman Property Trust issued 37,335,624 units to ASX-listed Goodman Group at $1/unit on Monday to complete payment for the $186.6 million December 2012 acquisition of partners’ interests in the 17.5ha Highbook Business Park.

Goodman Group took all its payment in units, half deferred. Fisher (interests associated with the estate of the late Sir Woolf Fisher, headed by Sir Noel Robinson) took $56 million in cash, the rest in units.

The trust bought 50% of Highbrook Development Ltd from Goodman Group and Fisher (25% each), and 25% of HBPL Properties from Fisher.

Since 2012, the trust has announced 15 new projects at Highrook costing a total $158.7 million, adding over 80,000m² of rentable area to the estate and generating $60 million in valuation gains.

The business park has over 70 businesses occupying 340,000m² in over 40 buildings. Its present value is $850million, with $60 million more work in progress.

PFI gets 5% valuation lift

Property For Industry Ltd said yesterday independent annual valuations were expected to increase the value of its portfolio by 5% ($47 million) to $985 million, and it confirmed earnings & dividend guidance.

PFI began the year with a portfolio of 79 properties valued at $876 million. It acquired 6 properties for $58 million and will have disposed of one property with a carrying value of $9 million (unconditional at 31 December, settlement 31 March 2016). Capex & property-related prepayments added $13 million.

CBRE, Colliers International & Jones Lang LaSalle carried out the valuations, which remain subject to finalisation & audit. The company will release its full-year results on Monday 15 February.

Zara the next big name for Sylvia Park

Kiwi Property Group Ltd said on Monday international fashion giant Zara would open its first New Zealand store at Sylvia Park late next year.

In October, Kiwi said another international fashion retailer, H&M, would also open at Sylvia Park late next year.

Zara has over 2000 stores in 88 countries. H&M is one of 6 brands developed by H&M Hennes & Mauritz AB of Sweden, which has 3700 stores around the world.

Chief executive Chris Gudgeon said Kiwi Property would invest $11.5 million to accommodate Zara in a new ground-level store in the mid-mall area.

He said the company was evaluating a $150 million 20,000m² retail expansion of Sylvia Park and was considering a range of options, including adding further international retailers, more specialty retail stores, department stores & parking. It’s in the predevelopment phase, which includes design, consenting & pre-leasing. Mr Gudgeon said construction could start in 2017 for a possible 2018 completion.

The company is also investigating a potential office development at Sylvia Park, as part of its town centre vision for the site.

Fletcher Building scores the Rainbow tick

Fletcher Building Ltd said on Monday it had scored the Rainbow tick – certification demonstrating it’s a business that’s inclusive for people who are lesbian, gay, bisexual, transgender, takatapui or intersex.

Chief executive Mark Adamson said Fletcher was New Zealand’s first construction & building materials company to achieve the Rainbow tick.

Rainbow Tick’s Michael Stevens said: “We were surprised when Fletcher Building contacted us as we hadn’t thought to approach a construction company, which shows even at the Rainbow Tick we need to challenge our own stereotypes of what sort of organisations want to be inclusive.”

3 Eastgate lease agreements go unconditional

NPT Ltd said yesterday 3 lease agreements at the Eastgate Shopping Centre in Christchurch have gone unconditional.

They are:

  • 900m² on the upper level to be occupied by Linwood Avenue Medical Centre in a new purpose-built integrated family health centre, in part of the space vacated by Farmers after the 2011 earthquake. The lease is for an initial term of 9 years from construction completion
  • 1200m² in the balance of the area vacated by Farmers, to be occupied by a cluster of social services providers that will co-locate into new office space, including Aviva, Barnardo’s, Family Help Trust, Red Cross & He Waka Tapu. The lease is for an initial term of 6 years from construction completion
  • A new standalone Restaurant Brands outlet at 283 Linwood Avenue, to be built on a site previously occupied by a house demolished this year. The lease is for an initial term of 12 years from construction completion.

NPT managing director Kerry Hitchcock said Hawkins Construction Ltd had been appointed for the works on the upper level. All 3 projects will start in January for completion in mid-2016.

NPT estimated the combined capex would be $7 million and would provide an annualised yield on cost of 9.25%. NPT will fund these developments from its existing bank facility.

Attribution: Company releases.

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Millennium & Copthorne lifts half-year profit

Millennium & Copthorne Hotels NZ Ltd lifted its half-year profit after tax & non-controlling interests by 93% to $12.01 million ($6.22 million), but expects a similar full-year result to 2014 as returns are reduced while the Copthorne Hotel Auckland Harbourcity is refurbished.

Half-year profit before income tax & non-controlling interests was up 36.4% to $20.38 million ($14.94 million), which managing director BK Chiu said was largely driven by improved operating performance at the company’s New Zealand hotels generally and continued profitability from its majority-owned land development subsidiary, CDL Investments NZ Ltd.

Group revenue increased 3.8% to $69.95 million ($67.41 million) and gross profit increased 7.9% to $39.26 million ($36.37 million). Consequently, operating profit for the period increased 16% to $20.16 million ($17.38 million). Earnings/share increased 4.4 times to 7.59c/share (1.4c/share).

Mr Chiu said total revenue for the New Zealand hotel operations (13 owned or leased & operated hotels, excluding 8 franchised properties) increased to $44.68 million ($40.57 million). Occupancy increased to 78.2% (72.7%), allowing for the closure of the 3 Christchurch cbd hotels. Revpar (revenue per available room) increased by 15.8% to $94.75 ($81.80).

The company is refurbishing 41 rooms at the Copthorne Hotel & Resort Queenstown Lakefront, expected to be finished by the end of the year, and announced the start of the $50 million Copthorne Hotel Auckland Harbourcity (Quay St) refurbishment last week. The Auckland hotel will be closed until early 2017.

CDL Investments NZ Ltd said yesterday its after-tax operating profit fell by 3.6% in the first half to $8.2 million ($8.5 million last year), on pretax profit up 2.6% to $11.7 million ($11.4 million) and revenue down 4.1% to $23.9 million ($24.9 million).

The company sold 128 sections in the latest period, down from 133 this time last year.

Net asset backing increased by 7.4% to 47.6c/share (44.3c).

In Sydney, occupancy at the Zenith Residences on King’s Cross was steady at 97%. Mr Chiu said the company had made good progress in resolving litigation affecting a majority-owned subsidiary.

Earlier stories: Corrected: Propbd on Q Th30July15 – 4 units sell at Ray White auction, CDL slips, Heartland on track
Propbd on Q Sn26July15 – Arvida plan fully subscribed, Quay St hotel refurb starts

Attribution: Company release.

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Propbd on Q Sn26July15 – Arvida plan fully subscribed, Quay St hotel refurb starts

Arvida plan closes fully subscribed
Millennium & Copthorne closes Quay St hotel for reburbishment

Arvida plan closes fully subscribed

Retirement village owner & operator Arvida Group Ltd has closed its share purchase plan fully subscribed. Arvida followed the $30 million placement to investors to partly fund the $62 million acquisition of the 3-village Aria portfolio with a $5 million 84c/share offer to existing shareholders.

Earlier stories:
25 June 2015: Arvida buys Aria Villages
22 November 2014: Arvida sets listing price at 95c

Millennium & Copthorne closes Quay St hotel for reburbishment

Millennium & Copthorne Hotels NZ Ltd began the $50 million refurbishment of its Copthorne Hotel Auckland Harbourcity on Quay St on Friday.

The project includes a complete replacement of the building services, new guestrooms & public areas. The hotel will increase from 187 to 190 rooms, including 8 suites (4 now).

Managing director BK Chiu said on Friday the upgraded property would be a landmark for Millennium & Copthorne Hotels NZ & the Millennium & Copthorne global group.

The hotel closed on Friday and is expected to reopen in early 2017.

Attribution: Company releases, M&C annual meeting discussion.

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