Singapore Raffles Hotel won’t be sold after all
Consortium that inked in-principle deal declines to say why sale fell through
WHAT A PITY: ‘This would have involved an assured distinct identity for Raffles Hotel as a flagship for Singapore in the international hospitality industry and a rejuvenation of the hotel.’ - SPOKESMAN FOR THE CONSORTIUM, expressing disappointment over the failure to buy Raffles Hotel (above) — ST FILE PHOTO
A PLAN to sell the historic Raffles Hotel again has fallen through.
The Business Times (BT) yesterday reported that a consortium led by former Credit Suisse banker Mark Pawley, which had inked an in-principle deal to buy the hotel earlier this month, was ‘very disappointed’ with the outcome.
Its spokesman confirmed that the deal was off.
‘This would have involved an assured distinct identity for Raffles Hotel as a flagship for Singapore in the international hospitality industry and a rejuvenation of the hotel,’ the paper quoted her as saying.
Citing confidentiality clauses, she declined to give reasons why the deal soured.
But she denied that there was any issue with the source of the funding, which is believed to be a family trust linked to a European family.
If the deal had gone through, the 121-year-old historic hotel and its adjoining shopping arcade would have changed hands for the second time in three years.
The agreed price was reportedly about $650 million - more than triple the $200 million paid by its American and Middle Eastern owners in 2005.
This was seen as a reflection of the strong boost in demand for hotel space in Singapore in recent years, with the country’s fast-growing visitor arrivals.
Mr Pawley is the chief executive of Singapore-based Oxley Capital Group, a private investment house focusing on real estate and private equity.
While he was head of the Asian real estate, gaming and lodging business at Credit Suisse Investment Banking in Asia, he was involved with the $1.7 billion sale of the entire Raffles Holdings’ hotel portfolio - including Raffles Hotel in Singapore - to United States-based private equity firm Colony Capital in 2005.
Colony later merged that portfolio with Fairmont Hotels & Resorts’ assets to create Fairmont Raffles Hotels International (FRHI). Colony reportedly holds about a 40 per cent stake in FRHI, while Saudi Prince Alwaleed bin Talal’s Kingdom Hotels International owns the rest.
On May 8, FRHI announced that it had reached an in-principle agreement to sell off Raffles Hotel. But as with its past real estate transactions, any hotels sold would continue to be part of the company’s hotel collection.
FRHI’s hotel management arm, Raffles Hotels & Resorts, also secured a long-term management contract to manage the hotel, reportedly for 40 years.
Market watchers told BT that most existing hotel groups would think twice about buying a hotel with a long-term management contract from the seller. They speculated that this clause might have scuppered the deal.
Source : Straits Time - 31 May 2008
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