Hong Kong firm acquires hotels in Vietnam and Indonesia for $106 million

Jones Lang Lasalle (JLL), a prominent real estate conglomerate, played a key role in advising and facilitating the sale of this unique hotel portfolio, marking the first hotel transaction in Southeast Asia this year.

Everland Opportunities IX Limited, a real estate development firm based in Hong Kong, acquired these three properties from Strategic Hospitality Holdings Ltd., a subsidiary of the Thai conglomerate Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust (SHREIT), for a total investment of $106.1 million.

The portfolio includes the 3-star Ibis Saigon South Hotel and the 4-star Capri by Frasers Hotel, both situated in District 7 of Ho Chi Minh City, and the 5-star Pullman Jakarta Central Park Hotel located in Indonesia.

The transaction involved the sale of the Pullman Jakarta Central Park and Ibis Saigon South hotels, along with their management rights held by Accor for the Pullman and Ibis brands. However, the sale of Capri by Frasers Hotel did not include ownership rights.

Julien Naouri, senior vice president of Business and Investment for Asia-Pacific at JLL Hotels & Hospitality Group remarked, "This distinctive sale of the hotel investment portfolio not only signifies the resurgence of transactional activities in Southeast Asia but also confirms the sustained recovery of cash flows for hotels in the region."

In early 2020, LT Rubicon, a UK-based company, expressed interest in acquiring the aforementioned three hotels for $118 million. However, the proposed transaction failed to secure shareholder approval during SHREIT's extraordinary general meeting held in June.

Subsequently, in October 2020, SHREIT's subsidiary listed the three hotels for sale again, this time with an asking price of nearly $133 million. The valuation included $14.7 million for the 140-room Ibis Saigon South Hotel, $23.7 million for the 175-room Capri by Frasers Hotel, and $94.3 million for the Pullman Hotel in Jakarta.

During that period, SHREIT's leadership acknowledged the financial challenges faced by the hotels, as they operated at a loss and struggled with significant costs and debts. Operating at limited capacity, the properties faced difficulties in securing additional short-term funding.

The ongoing impact of the pandemic on revenue, the current financial conditions, and a lack of cash flow exacerbated the challenges faced by the group, with no clear indication of a swift recovery. Moreover, SHREIT encountered multiple breaches of contractual agreements and potential litigation risks from both partners and lenders.

Given these circumstances, the Board of Directors decided to divest the hotels in Vietnam and Indonesia, despite the lower purchase price offered by potential buyers.

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