W Hotel near Petronas Twin Towers for sale for RM360mil

At night, the facade of the W Kuala Lumpur lights up in pink and purple. — WONG LI ZA/The Star

PETALING JAYA: W Hotel joins a list of other hotels for sale, with owner Tropicana Corp Bhd believed to be asking RM360mil for it, according to sources. This translates to RM2.4mil a room, which two out of three sources said is “a bit high”.

The hotel started accepting guests in the second half of last year.

Tropicana representative declined to comment.

Sources said the price the owner is seeking may be acceptable to foreign investors, especially those from China, who may view its proximity to the Petronas Twin Towers as a key determining factor.

“A sort of trophy asset,” a source said.

Located at the site of the former Bok House, W Hotel is less than 400 metres from the Twin Towers, Kuala Lumpur’s most famous destination.

According to previous press records, the mansion was build by Cycle & Carriage founder Chua Cheng Bok in 1929. He willed it such that the house was not to be sold for four generations – which extends to 2025, according an earlier report.

From 1958, the property was converted into the Le Coq D’Or restaurant, a venue for fine dining in the 1960s and 1970s. In the afternoon, English tea with dainty biscuits, scones and sandwiches were served within and on the verandah.

Attempts to save the imposing colonial-style mansion failed and on Dec 15, 2006 it was demolished.

At night, the facade of the W Kuala Lumpur lights up in pink and purple. — WONG LI ZA/The Star"

The 1.28-acre land on which Bok House was sited was believed to have been sold to a South Korean who then sold it to then-property developer Dijaya Corp Bhd for RM123mil, or RM2,200 per sq ft (psf), in July 2008. Dijaya Corp was renamed Tropicana Corp to reflect its Tropicana property brand. Tan Sri Danny Tan Chee Sing is the founder of Tropicana.Danny Tan, the younger brother of Berjaya Group’s Tan Sri Vincent Tan, has a spectrum of businesses which include property development and investment, resort management among others through his investments in public and private limited corporations.

Sources said W Hotel has been unofficially on the market for some time, according to sources, but the price tag tended to be on the high side even then.

The hotel is located from level eight to 24, while 353 units of residences are from level 25 to 52. It has four basement levels for parking. The building is 55-storey high.

A Tropicana Corp staff said up to 90% of the residential units have been sold and the remainder are being sold at RM2,600 psf, before rebates. Most of the units were sold to investors from China, Hong Kong, Taiwan, Japan, South Korea, Singapore and the United States. The residential units are expected to be handed over to buyers after the Chinese New Year, the staff said.

Sources said Tropicana Corp has put its property assets, including its land in Johor and Langkawi for sale. It has also put out a list of commercial blocks it would like to divest.

Late last year, the Boustead Group invited bids for Royale Chulan Bukit Bintang in a tender exercise. The 400-room hotel is said to have a reserved price of about RM190mil. The tender closed without any deal.

“There may be private negotiations ongoing and we may hear soon that there is a deal done,” a source said, adding that foreign investors appeared to have taken a fancy to Malaysian hotels.

Zerin Properties chief executive officer Previn Singhe said hotels are offering between 5.5% and 6.5% annual yield, which is still “worthwhile”, considering today’s low interest rate regime, the flood of office and mall space which is putting pressure on rental.

“There is no one yield for the hotel business. It depends on how the owner manages it, its target audience and its location,” says Previn.

Last week, another source said the last several years had seen quite a number of acquisitions of Malaysian hotels by foreign investors.

“It could be due to the weak ringgit that foreign investors are coming in,” he said. As for the vendors, it could be in anticipation of a weak market or concerns about further weaknesses if corporate debts are high, the source said.

In September 2017, the 203-room Geo Hotel, near the Central Market was sold to Singapore-listed ICP Ltd for S$27.5mil, or RM410,296 per room.

Three months later, the 154-room Nova Hotel in Jalan Alor was sold for RM63.8mil, or RM414,286 a room. The buyer was Regalwide Holdings Sdn Bhd, which is owned by Choo Chong Ngen, a Singaporean hotel tycoon who founded the Hotel 81 budget hotel chain.

The source said the hotel sector seems to enjoy the confidence of foreign investors despite the weak room rates and less than ideal occupancy rates. He cited IGB selling its 910-room Renaissance to Singapore-based group Ventura International in 2016 for RM765mil, or about RM840,000 a room.

A year earlier, Singapore-based Royal Group bought the DoubleTree by Hilton Hotel Kuala Lumpur, from asset manager Blackrock for RM388mil, or RM720,000 a room. DoubleTree is located within The Intermark commercial development along Jalan Tun Razak in the city.

In the second quarter of 2018, the Royal Group sold two hotels for RM240mil, or about RM451,000 a room. These being the 532-room Hilton Garden Inn North (formerly Cititel Express) and Hilton Garden Inn South (Hotel Empress) in Jalan Tunku Abdul Rahman in the city.

The buyer was Thailand-listed Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust.