Hilton sells Sydney hotel to Chinese-owned commodities trader
Henderson splits from joint venture with US fund after year
Greenland starts ₤600 million London development
Urban renewal a big bonus for Goodman Group
Hilton sells Sydney hotel to Chinese-owned commodities trader
Hilton Worldwide Holdings Inc has sold the 579-room Hilton Sydney hotel (pictured above) to Chinese-owned Singapore commodities trader Bright Ruby Resources Pte Ltd for $A442 million.
Hilton was pleased with its price, but who is the buyer, Bright Ruby? Various media have described the company as being controlled by “the Du family of Shandong, China”. Du, I’ve read, is the 47th most common surname in China – and in the village where Du Shuanghua came from, everyone carried the surname Du.
Du Shuanghua, founder & major shareholder of Rizhao Steel in Shandong Province, was most recently ranked at 263 on Forbes magazine’s list of wealthy Chinese with assets of $US670 million. In 2009 he backed 30% of his steel company shareholding into a Hong Kong-listed industrial investment holding company, Kai Yuan Holdings Ltd, getting a 5.54% stake in the listed company in exchange, and also affording himself some official protection just ahead of an unusual steel industry bribery case (see the Sydney Morning Herald story by John Garnaut below for all the implications of that).
Du Shuanghua began investing in Sydney in 2013. Spreading himself around, Mr Du’s Bright Ruby spent over $S1 billion buying the Grand Park Orchard Hotel & Knightsbridge retail podium on Singapore’s Orchard Rd and he lent Kai Yuan $US280 million to help it buy the Paris Marriott Hotel Champs-Elysees for €344.51 million.
Mr Du incorporated Bright Ruby in 2009 and reports on its previous property investments indicate it has attracted considerable investor support in China for its purchases.
Bright Ruby made his 2013 Singapore purchase for $S1.15 billion, which the Straits Times calculated was at a price of $S1.4-1.5 million/room (based on $S102-108,000/m² retail), well above the previous high of $S1.1 million/room, and at a net yield just over 4%.
A JLL report last year put the price in American dollars at $US921 million, of which $US595 million was for the 6875m² retail at $US86,545/m², thus pricing the 308 hotel rooms at $US1.06 million/room (current conversion rate $S1.41 million).
In Sydney, Bright Ruby bought 2 cbd office buildings in 2013, one at 231 Elizabeth St for $A201 million, but it appeared to be against stiff competition for the Hilton.
Hilton Worldwide president & chief executive Christopher Nassetta said the sale was “at attractive pricing in a tax-efficient manner”. It was sold at a multiple of 15 times adjusted ebitda, on a yield of about 6%. He said Hilton expected to use the sale proceeds to reduce long-term debt.
Hilton looked for interest in its Sydney hotel early this year and revealed the sale down in the smallprint of its quarterly results announcement on 29 April. It was the only hotel Hilton owned as well as managed in Australia, and it will continue to manage it under a 50-year agreement.
In its quarterly results, Hilton said it increased earnings/share by 25% to US15c, net income by 22% to $US150 million, adjusted ebitda by 18% to $US599 million and the adjusted ebitda margin by 320 basis points, system-wide comparable revpar (revenue/available room) by 6.6% on a currency-neutral basis, management & franchise fees by 18% to $US391 million, and reduced long-term debt by $US225 million.
Hilton opened 8000 rooms during the quarter and approved 23,000 for development, growing its development pipeline to 1432 hotels & 240,000 rooms.
Links: Australian Financial Review, 3 May 2015: Bright Ruby buys Sydney Hilton
Mingtiandi, 17 June 2014: Controversial China steel magnate linked to $US468 million Paris hotel deal
JLL, 2 April 2014: Asia’s shopping centres entice investors
Australian Financial Review, 25 September 2013: Bright Ruby spends $A975 million on Singapore hotel gem
Sydney Morning Herald, 17 April 2010: Bribery pays: court reveals iron ore corruption
South China Morning Post, 18 June 2014: Hong Kong-listed Kai Yuan buys Paris Marriott Hotel Champs-Elysees hotel
Henderson splits from joint venture with US fund after year
US investment fund TIAA-CREF (Teachers Insurance & Annuity Association – College Retirement Equities Fund) has bought out its partner in the year-old TIAA Henderson Real Estate Ltd (TH Real Estate) joint venture for £80 million.
TIAA-CREF, based in New York, had 60% and Henderson Global Investors Ltd 40% of the partnership, which managed $US26 billion of assets in Europe, Asia & North America. TIAA-CREF injected its European real estate business into the joint venture, while Henderson injected its European & Asia Pacific-based real estate businesses. TIAA-CREF continued to manage its own North American real estate business, and also provided investment management services for the new venture.
The company had its headquarters in London and James Darkins, Henderson’s property managing director, became the chief executive. During the joint-venture year TH Real Estate made 67 acquisitions worth $US3.7 billion, raised $US1.3 billion of new equity mandates and secured $US3.6 billion in capital recommitments from closed-end fund investors.
Henderson chief executive Andrew Formica said TH Real Estate would continue to sub-advise the Henderson UK Property OEIC (open-ended investment company – unit trust).
Australian insurance company AMP Ltd bought UK investor Henderson in 1998 and introduced the Henderson name to its investment businesses until 2003, when Henderson Group plc was relisted as a public company in London & Australia, with Henderson Global Investors Ltd as its property arm. AMP Capital Investors (NZ) Ltd was called AMP Henderson Global Investors (NZ) Ltd at that time.
TH Real Estate chief executive James Darkins, who’d emigrated to Wellington in the 1980s, joined Henderson in 1998 as head of property in New Zealand, then moved to the Sydney head office of AMP and back to London in 2001 as Henderson’s property managing director. He’s maintained a link to Wellington throughout, as a director of private company The Property Group Ltd.
Greenland starts ₤600 million London development
Chinese state-owned developer Greenland Group has broken ground on its first UK project, the ₤600 million residential Ram Quarter redevelopment of the Ram Brewery site in Wandsworth, London.
661 homes are envisaged for the 9ha, including a mix of luxury apartments, affordable housing & commercial facilities. The refurbished brewery will have 5200m²of retail space.
Greenland also has a major Canary Wharf project due to start in London, is developing apartments in Sydney and unveiled the $US666 million 52ha Tebrau Bay Waterfront City in Malaysia’s Johor state, across the water from Singapore, in January.
Michael Cole, of the Mingtiandi website, said at least 7 Chinese developers had Johor projects, worth billions of dollars in projected investment values.
Links: Greenland Group breaks ground on $922 million London housing project
Greenland’s $US666 million project to bring snow & opera to Malaysian seaside
Urban renewal a big bonus for Goodman Group
Changing land use in Sydney & Melbourne is proving a highly profitable bonus for ASX-listed Goodman Group, which now has an urban renewal pipeline exceeding 35,000 apartments in the 2 cities.
Full story: Urban renewal a big bonus for Goodman Group
Attribution: Hilton Worldwide, JLL, Straits Times, Singapore Business Review, Mingtiandi, Australian Financial Review, Sydney Morning Herald, Forbes, Kai Yuan, South China Morning Post
Regular leads: Europe Real Estate, Mingtiandi, Planetizen
