Dorsett Hospitality International has entered into an agreement to sell Silka West Kowloon in Hong Kong to China-based Golden Wheel Jasper at HK$450 million (US$58 million), through disposing its equity interest in and shareholder's loan to its wholly-owned subsidiary, Double Advance Group (DAGL).
Upon completion, Far East Consortium International (FEC), which wholly owns Dorsett, is expected to record a gain of approximately HK$316 million, and Dorsett will enter into an agreement with DAGL to offer services in the management and operation of the hotel under the Silka brand.
Silka West Kowloon
The net proceeds from the sale will be retained as capital for Far East’s business development and general corporate purposes.
Chris Hoong, managing director of FEC, said: "The sale is another example of our track record in successful monetisation of hotel assets, and is consistent with our strategy of disposing smaller and non-core hotel properties. It enables us to release hidden value in our hotel portfolio accumulated over the years.
“With an increasingly diversified development portfolio, the group enjoys a high degree of flexibility in deploying capital across various business divisions, allowing us to generate higher return on capital employed in the long run."
As at September 30, 2016, FEC operated 20 owned hotels in Hong Kong, China, Singapore, Malaysia and the UK, with more than 6,000 rooms and 13 hotels in the development pipeline. When all the hotels in the pipeline become operational by the year ending March 31, 2022, the group will have 33 owned hotels operating more than 9,300 rooms.