Oxley Holdings

[CY09]

Hi curiousparty,

To be honest even without a fire sale, I doubt the 4 star novotel hotel at stevens road can fetch the valued valuation under private treaty purchase/ willing seller willing buyer. I do not believe many listed companies's market valuation of Singapore commercial/hotel even though its written by Savilles/Knight frank. The valuer industry does have reputable and smart people, but I am unable to vouch for their honesty

Companies tend to want their assets to be as fully valued as possible. Valuers are hired by companies. If an unfavourable value is produced, the valuer can lose a contract. Same logic applies to the accounting industry here.

Anyway I realise, the hotel is valued at SGD$900 million on balance sheet, but i seriously doubt 80% of its valuation can be achieved when revenue is only profoma $120 million per year/ Operating profit before interest and tax is $18 million per year

<Indirect Owner of Oxley shares, went AGM to ask for monetisation of Hotel>

[weijian]

Anyway I realise, the hotel is valued at SGD$900 million on balance sheet, but i seriously doubt 80% of its valuation can be achieved when revenue is only profoma $120 million per year/ Operating profit before interest and tax is $18 million per year

<Indirect Owner of Oxley shares, went AGM to ask for monetisation of Hotel>

Hi CY09,
I looked at Oxley's 1H24 and cannot find the valuation for Mercure/Novotel hotel on Stevens. There is however a 963mil for its PPE carried on the BS which includes 3 different office properties and the hotel itself (as per AR)

As for the hotel's earnings, it shows 30mil for 1H24 translating to proforma 60mil annually. 1H24 PBIT is 9mil and proforma would be 18mil.

[CY09]

Looking at the same document as you. Under the hotel segment assets, there is a segment asset of $892 million. I used this figure. So it should be the hotels at Steven Road.

PBIT of $18 million, I feel does not justify good valuation. Even a cap rate of 3% for hotels will not be able to magically tweak to a high valuation.

[weijian]

hi CY09,

Thanks a lot. Having looked at the hotelier business model, I suspect that PBIT is not a good gauge of valuation. As specuvestor once mentioned in another thread, the hotel business is like a long term rental business hoping to break even post all cash costs as the meat is in the capital gains.

From AR23, we know Mercure/Novotel hotel on Stevens has a total of 772 rooms. With a FV of 893mil, that would mean 1.15mil per key. There are 3 recent transactions off my head:

(1) UOL sale of Parkroyal on Kitchener Rd in mid 2023 (rebranded to Novotel Spore on Kitchener) - The 542key freehold hotel together with its adjoining retail wing, was sold for 525mil. This translates to 0.97mil per key.

(2) Gaw Capital sale of Hotel G in Bugis area in early 2024 - The 308key freehold boutique (or budget) hotel was sold for 240mil. This translates to 0.78mil per key.

(3) M+S Sale of Andaz Hotel at Duo in 2019 - The 342key 99year leasehold (started 2011) luxury hotel was sold for 475mil. This translates to 1.39mil per key.

On a comparable sales perspective, Mercure/Novotel hotel on Stevens is valued at ~15% more than the similarly branded (ie. midscale) Novotel Spore on Kitchener. And it is still ~20% lower than the 99year leasehold luxury Andaz Hotel at Duo. I am obviously not qualified to say this is fair or not. But I would say it isn't too far off based on this single data point comparable sales comparison.

[Shiyi]

hi CY09,

Thanks a lot. Having looked at the hotelier business model, I suspect that PBIT is not a good gauge of valuation. As specuvestor once mentioned in another thread, the hotel business is like a long term rental business hoping to break even post all cash costs as the meat is in the capital gains.

From AR23, we know Mercure/Novotel hotel on Stevens has a total of 772 rooms. With a FV of 893mil, that would mean 1.15mil per key. There are 3 recent transactions off my head:

(1) UOL sale of Parkroyal on Kitchener Rd in mid 2023 (rebranded to Novotel Spore on Kitchener) - The 542key freehold hotel together with its adjoining retail wing, was sold for 525mil. This translates to 0.97mil per key.

(2) Gaw Capital sale of Hotel G in Bugis area in early 2024 - The 308key freehold boutique (or budget) hotel was sold for 240mil. This translates to 0.78mil per key.

(3) M+S Sale of Andaz Hotel at Duo in 2019 - The 342key 99year leasehold (started 2011) luxury hotel was sold for 475mil. This translates to 1.39mil per key.

On a comparable sales perspective, Mercure/Novotel hotel on Stevens is valued at ~15% more than the similarly branded (ie. midscale) Novotel Spore on Kitchener. And it is still ~20% lower than the 99year leasehold luxury Andaz Hotel at Duo. I am obviously not qualified to say this is fair or not. But I would say it isn't too far off based on this single data point comparable sales comparison.

In eary 2019, Oxley received an offer of $950 m from Tahir of Mayapada group for the two hotels.  But the deal was aborted by the buyer and deposit forfeited.