In a filing with Bursa Malaysia today, Boustead said the group was expected to realise an estimated gain of RM92 million on completion of the proposed disposal, translating into about 4.5 sen per share.
Boustead Hotels & Resorts Sdn Bhd today signed an agreement to sell the 418-room four-star hotel to Hotel Royal’s subsidiary Every Room A Home Sdn Bhd. The transaction was made in cash.
A spokesperson from Boustead said in a statement today that the disposal of this property formed part of the Boustead group’s overall plan to return to profitability by way of divesting non-strategic assets.
The Royale Chulan Kuala Lumpur, located along Jalan Bukit Bintang, is facing increased competition within the Golden Triangle of Kuala Lumpur as well as online platforms such as Airbnb.
“This resulted in its relatively low occupancy rate of 52% in 2018 versus the average occupancy rate of hotels within the Klang Valley of about 74%,” Boustead said.
The company said that a refurbishment exercise would also be needed for the ageing property to remain attractive and competitive.
Weighing the prospects of maintaining the hotel, the sale offers greater value to the group.
The prime location of Royale Chulan Bukit Bintang Hotel enabled the group to dispose of the hotel at a premium over the net book value, Boustead said.
However, the proposed takeover is on the condition of the buyer obtaining approval from the Economic Planning Unit of the Prime Minister’s Department of Malaysia and the Federal Territory of Kuala Lumpur Land Executive Committee as well as completing all conditions and listing requirements imposed by the Singapore Exchange Securities Trading Ltd.
The proposed sale is expected to be completed by July 2019.