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Monday, 3 December 2012

YTL focuses on UK hotel assets


It expects much competencies from Bath real estates

KUALA LUMPUR: Five months after formalising its acquisition of three Marriott hotels in Australia, and with the Dec 8 official re-opening of Majestic Hotel well under way, the YTL group is now focusing on its new hotel assets in Bath, the United Kingdom.

YTL Corp Bhd executive director Datuk Mark Yeoh Seok Kah said although its investment in the Bath real estate was small, there was much competencies to be had from it.

Yeoh, who is also the executive director of YTL Hotels & Properties Sdn Bhd, said the hotel arm took over the Bath project about eight months ago, reportedly for £18,000 (RM87,588). YTL Hotels acquired the entire stake in Bath Hotel and Spa, which makes it a wholly-owned subsidiary of YTL Hotels and an indirect subsidiary of the group.

Yeoh said the Royal Bank of Scotland (RBS) is providing two-thirds, or £20mil, of the £30mil investment to support the group's acquisition, and redevelopment, of the 99-room hotel project located in the heart of the historic spa city square.

“It has been very favourable thus far with lending over there, and the Bath and North East Somerset Council. The hotel is under this local council,” he said.

He said the project involves a total of four parcels, one of which is a Grade II-listed building.

“When completed, and we are working towards the hotel opening in the first quarter of 2014, it will be one of UK's first hotel to use natural thermal water and YTL's first luxury spa hotel in the UK and will be able to attract even more visitors to the already popular city,” he said.

The supply of thermal water to the hotel, the piping and engineering works will be undertaken by the Wessex Water team.

“We have the opportunities to overlap all our services,” he said.

Yeoh said despite being a small investment of not more than £30mil, the benefits from the venture is tremendous.

“The accretive value from it is very positive. Everyone seems to be looking at London today and they may be able to accept a 3% to 4% yield, but I will need a 7%, or more-than-7% yield,” he said.

Buying into an existing hotel would come with a huge premium.

“This presents an opportunity to build up our core competencies. And we have the capacity. Also, the previous owner has already completed the refurbishment of the buildings,” he said.

He said he was trying to get the Wessex team to build hotels. Financially, the construction part of a project tend to be the single biggest risk. But because the group has the Wessex engineering and construction team, he believes he has a 20% to 30% cost advantage.

The YTL group wholly owns Wessex Water Services Ltd (Wessex Water), a water supply and sewerage utility company serving an area of the south west of England, covering 10,000 sq km including Bristol and other counties. Bath is about 20km from Bristol, and is within its service area.

Yeoh said the property comprises four buildings, namely the Gainsborough Building, the Grade II-listed Abbey Church House and two other parcels. Gainsborough used to be a hospital, and recently served as City of Bath College's centre for creative arts. It sits alongside the new Bath Spa and is built on top of the old Roman ruins.

Abbey Church house is Bath's sole surviving Elizabethan mansion with a rich history.

The Bath Hotel was supposed to be undertaken by Bath Hotel & Spa Company Ltd, a joint partnership between The Trevor Osborne Property Group (The Osborne Group) and CP Holdings. The Osborne Group is a property development company which specialises in developing mixed use and heritage projects alongside public sector partners and trust bodies.

On the London property scene, he said he expected more Asian money, particularly Mainland Chinese and Middle Eastern investors, to make a huge impact in the months ahead as banks and insurance companies go on a downsizing mode.

There are many beautiful buildings there which are up for redevelopment and which can be turned into hotels,” he said.

On the group investing in commercial assets in Europe, Yeoh said the euro need to stabilise.

“We already have Wessex. We have sterling revenue to hedge against sterling investment,” he said.


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