Sleeper March/April 2010

some of Dubai’s recent overseas Nakheel Hotels banner. a sell-off of stakes in companies is in line with the company’s
investments might be up for This brought Istithmar’s hotel and some of the more disparate disciplined strategic disposition
grabs. As well as presenting the interests together with Nakheel’s acquisitions and development strategy.” The 116 room property
investment opportunity, the arrival hotel interests which include projects being quietly disposed fetched €305,000 per room
of some distressed sales will help New York’s Mandarin Oriental of. The turmoil also reinforces which is perhaps a more realistic
stop prices overheating thanks in Columbus Circle, the W Hotel that Jumeirah will be focused on valuation yardstick in the current
to the shortage of supply that Union Square, also in NYC, the hunting management contracts climate than yields or EBITDA
there currently is in commercial Washington Hotel in Washington rather than deploying any multiples. The capitalisation rate
property. DC, among others. It also has a capital. But rivals should be (net operating income divided
It is easy to over cook the stake in IHI, the investment arm wary of writing-off the brand. Le by sale price) was 4.8% which
distress opportunity, however. of Corinthia and the lead investor Meridien continued to sign deals looks surprisingly low but reﬂects
Dubai – and by this I mean the in the Metropole. even during the depths of its own 2009’s depressed trading.
myriad state-controlled companies Nakheel also has stakes in ﬁnancing problems. Separately, Jones Lang
such as Dubai World (which individual hotels including a third LaSalle Hotels is forecasting that
includes subsidiaries such as of London’s Metropole, half of transaction volume will rise 20%
Istithmar, Dubai Ports, Nakheel, Fontainebleau in Miami, and half
Westmont
to 40% in 2010 having dropped
Leisurecorp and Limitless) and of One & Only’s Los Cabos in
shows prime
to just $9bn in 2009. This was a
Dubai Holding (which includes Mexico, plus stakes in a number drop of 64% on 2008. “Across
Jumeirah, Tatweer, Dubai of development projects including appetite the world, the trading of single
International Capital and Dubai two Ws in Thailand. Also, Nakheel hotel assets, mostly valued at up
Properties) among many – is holds 9.4% of CDL Hospitality Westmont Hospitality has to $100m, will initiate recovery.
unlikely to sell off plum assets at Trusts, the Singapore REIT that paid �35.5m for the Renaissance Entrepreneurial transactions
knock-down prices. owns six hotels and is managed Paris Hotel Le Parc Trocadero that can be ﬁnanced regionally
At present, the crisis seems by a subsidiary of Millennium & in a move that highlights the or locally will be the ﬁrst to re-
focused on property developers Copthorne. Among the other high ongoing appetite for prime enter the market,” said Arthur de
Nakheel and Limitless within proﬁle assets of Nakheel Hotels assets. But it also highlights Haast, global CEO of JLL Hotels.
Dubai World. Debts of $26bn is the liner Queen Elizabeth 2, the danger of reading too Asian conglomerates were poised
are set for restructuring out of bought in 2007 with the intention much into punchy multiples to emerge as one of the primary
a total of $56bn owed by Dubai of turning into a luxury hotel in the current distressed global acquisition groups in
World, according to the ofﬁcial moored off one of Dubai’s Palm environment. 2010 as they seek prime assets in
press release. The company is islands. The property was bought from gateway markets, especially in the
attempting to ring fence other Strategic Hotels, the US REIT, US and the UK, added de Haast.
parts of itself such as Istithmar HA Perspective: What the on a multiple of 16.6 times
and the ports business. internal move of Nakheel Hotels this year’s forecast EBITDA of
Confusingly, Nakheel Hotels within Dubai World means is that €2.1m. As an indication of how
Hotel Analyst
was moved from Nakheel to the hotels business is most likely much this EBITDA is down on
Istithmar in September in a out of the eye of the storm – at historic standards, Strategic also
Having read these four pages
change that saw a number of least for the time being. said it will collect €1.4m from of Hotel Analyst we hope you
executive changes. CEO Joe Sita This does of course depend Marriott relating to a performance want to find out more. Hotel
left during the autumn with the on whether the holders of Dubai guarantee. Strategic CEO
Analyst is the news analysis
changes. World’s Islamic bonds have a Laurence Geller said: “We are
service for those involved with
This reversed a move at the charge on any of these assets. pleased to announce the sale of
financing hotel property or
end of 2007 that saw Istithmar’s Press reports suggest that this this asset at an attractive price to
hotel operating companies. It is
designed to understand, as well
hotel operations – which include might well be tested in court. our shareholders in an extremely
as report the news.
a sizeable stake in the Kerzner In any case, hotel assets held by difﬁcult transaction environment.”
group, the master franchise rights entities of the Dubai government “The sale, at a property where
for easyHotel in the region (the may yet come to market, including we were contractually bound
ﬁrst property is due to open those outside of Dubai World, but by Marriott International to
To sample visit:
in Dubai early next year) plus it is hard to see many bargains undertake a full renovation,
www.hotelanalyst.co.uk/sample
it has a number of individual appearing in the short-term. And substantially supplements our
For more details visit:
asset investments such as the it is even harder to see any key corporate liquidity, reduces
www.hotelanalyst.co.uk
Knickerbocker in New York strategic assets being sold. corporate overhead related to
or call +44 (0)20 8870 6388
– merged with Nakheel under the There is far more likely to be our European operations, and
MARCH / APRIL 2010 WWW.SLEEPERMAGAZINE.COM WWW.SLEEPERMAGAZINE.COM MARCH / APRIL 2010 107
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