There is growing speculation that Millennium & Copthorne may choose a REIT solution to realise some of the value locked up in its asset base.
Its parent group, Singapore-listed City Developments, said earlier this month that it is eyeing the potential to divest assets via a Singapore REIT and the London-listed M&C may be tempted to use the same opportunity.
Kwek Leng Beng, executive chairman of City Developments (and also of M&C), said that \all kinds of assets\ would be considered for a REIT. The company failed to sell a Sing$788m worth of commercial property assets late last year and these are thought a prime candidate to become a REIT.
But additionally, M&C might be tempted to inject its five Singapore hotels into a Singapore REIT.
Such a move was made by Ascott Group, the serviced apartment specialist, at the end of March. It sold 12 properties, including some Asian units outside of Singapore, worth Sing$856m to a new REIT Ascott Residence Trust.
Kwek commented last month that cross border tax issues meant any Singapore REIT would, for the time being, remain local. But he added that it was possible to have a competing REIT in London.
At M&C first quarter results briefing, however, no mention was made of REITs. The figures, unveiled last Thursday, showed sales up 16% to £150m and hotel operating profit ahead by 15% to £18m.
The performance in London was flat due to renovation work at the Gloucester hotel which has now completed. But both the US and Asia were strong.
The company announced that it had won a management contract for a 198 apartment hotel in Abu Dhabi that would trade under its luxury Millennium brand.
The Middle East is a prime expansion area for M&C and it hopes to open 35 hotels there over the next five years. Alongside the Millennium brand, the three-star Kingsgate badge is to be launched in the region, initially in Abu Dhabi.