Archive | Millennium and Copthorne

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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Propbd on Q T26May15 – 9 sell at Colliers, convention centre go-ahead, Quay St hotel remodelling to start

9 sell out of 12 properties at Colliers auction
Convention centre agreement reached – aim to start this year
Tenders in soon for Quay St Copthorne’s remodelling

5pm:
9 sell out of 12 properties at Colliers auction

7 retail, fastfood & gym units in the Millwater Central neighbourhood centre on the Hibiscus Coast were sold under the hammer at Colliers International’s auction today – the first 4 at yields of 4.9-5.1%.

A Manukau warehouse and 2 of the 3 office units in a Symonds St building were also sold. Auction results:

Millwater Central, 175 Millwater Parkway:
Unit 3, Bruce Lee Sushi, sold for $835,000 at 4.93% yield
Unit 2, Millwater Superette, sold for $812,000 at 5.06% yield
Unit 11, Mike Pero & Barbershop Co,  sold for $841,000 at 5.09% yield
Unit 4, Millwater Takeaways, sold for $795,000 at 4.93% yield
Unit 6, Mumbai Central, sold for $775,000 at 5.39% yield
Unit 13, Jetts, sold for $1.4 million at 6.2% yield
Unit 1, The Pet Store, sold for $1.335 million at 5.97% yield
Agents for all 7 Euan Stratton, Matt Prentice & Shoneet Chand

Mt Eden, 12 Akepiro St, passed in at $1,127,500, John Davies & Peter Kermode

Manukau, 577 Great South Rd, sold for $2.75 million at 7.56% yield, Ash Vincent, Peter Kermode & Jimmy O’Brien

71 Symonds St:
Level 8A, sold for $365,000
Level 7A, passed in, under negotiation
Unit 1A, sold for $370,000
Agents for all 3 Kris Ongley & Jonathan Lynch

Convention centre agreement reached – aim to start this year

SkyCity Entertainment Group Ltd & the Government agreed today on the preliminary design for the international convention centre proposed for SkyCity’s site between Hobson & Nelson Sts.

SkyCity chief executive Nigel Morrison & Economic Development Minister Steven Joyce executed an amended development agreement for a slightly smaller centre. SkyCity’s minimum capital investment will rose from the original $402 million to $430 million, the project’s future development rea will be relocated from Wellesley St to Hobson St so the proposed hotel can be built next to the centre and will have greater responsibility for managing the design, procurement & construction processes.

SkyCity hopes to get non-notified resource consent, 2 building works contracts signed with a construction partner and a start to construction by the end of this year.

Tenders in soon for Quay St Copthorne’s remodelling

Millennium & Copthorne Hotels NZ Ltd expects to have tenders in next month for its redevelopment of the Copthorne Hotel HarbourCity on Quay St.

Managing director BK Chiu told the annual meeting today the project should be completed in early 2017. The hotel won’t be demolished but the interior will undergo major change to include more suites and a refocus towards the corporate market. The hotel has 187 rooms now and should end up with 190 in the new design.

Attribution: Auction, company & ministerial releases, company annual meeting.

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Propbd on Q W1Apr15 – How to improve housing supply, NPT stake, prefs spread waiver, Goodman facility, notes expire

June report on improving housing supply
Salt raises NPT stake
Millennium & Copthorne gets waiver on prefs spread
Goodman gets extra bank facility
SkyCity notes expire this time

June report on improving housing supply

The Productivity Commission said yesterday it planned to release a draft report in June on improving housing supply & development capacity.

The commission published an issues paper in November and said it had received 75 submissions. It had also held a number of engagement meetings with councils (particularly high growth councils), central government agencies, developers, building companies, government agencies, planners, infrastructure providers and building & planning academics.

It said the inquiry had already identified a number of leading practices which would significantly improve supply & development capacity.

Link: Productivity Commission housing inquiry

Salt raises NPT stake

Salt Funds Management Ltd has lifted its stake in listed property investor NPT Ltd from 12.624% last December to 13.672%, as of last Friday.

Millennium & Copthorne gets waiver on prefs spread

NZX Regulation has granted Millennium & Copthorne Hotels NZ Ltd a 12-month waiver from the requirement to have more than 500 public investors holding at least 25% of its preference shares.

Millennium & Copthorne said its capital reduction scheme last July contributed to the decline in spread. It also said the underlying number of members of the public holding the shares was likely to be greater than the number registered, because 6 custodians & nominees held preference shares.

Goodman gets extra bank facility

Goodman Property Trust manager Goodman (NZ) Ltd has secured a new $100 million standby facility from ANZ Bank, subject to usual commercial conditions.

Chief financial officer Andy Eakin said the new facility gave the trust more flexibility as it approached the first expiry of the Goodman+bonds programme.

SkyCity notes expire this time

SkyCity Entertainment Group Ltd has decided not to extend its capital notes again. It issued the notes in 2000 and extended them in 2005 & 2010. They will reach the end of their current term on Friday 15 May.

SkyCity said another 5-year extension didn’t fit with its capital management strategy.

Attribution: Company releases, commission newsletter.

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