Mulpha puts Australia’s Hayman Island on market
Putting luxury island resort on sale offers ‘unique opportunity’ for the Malaysian company to explore all options
MULPHA International Bhd, which was recently in the news over alleged poor practices at its retirement village in Australia, has put one of its key assets in that country - the Hayman Island for sale.
If successful, it could unlock at least A$300mil or RM1bil for the asset-rich but debt-heavy property developer according to reports.
Its chief executive officer Gregory David Shaw says the group is putting the five-star private island resort in Australia’s Great Barrier Reef up for sale to explore all its options, but stresses that it remains committed to rebuilding the resort that was damaged from Cyclone Debbie in March should it not happen.
Known to dispose of assets and invest in new ones, Mulpha bought Hayman Island in 2004. It carries a net book value of RM327.91mil, according to the company’s 2016 annual report.
The 160-room resort is currently closed for renovations until mid-2018.
More significantly the group had recently cut ties with the resort’s Middle Eastern operator One & Only.
“With the recent departure of the (hotel’s) operator and extensive works required to restore the property post the cyclone, there is a unique window for a new owner and operator to realise their vision of a new Hayman.
“This sale process is conducted to find if there are such potential parties before we start our physical works ... as once we start work this unique opportunity will be lost and any new owner will have to renovate what we have rebuilt,” Shaw says.
“We are committed to Hayman and the rebuilding process but with this unique window of opportunity we must explore all the options,” he says in email replies.
According to Shaw, the group’s philosophy is that if it receives an offer it believes fully reflects the value (of an asset) and believes it cannot add any more value, it would then consider selling.
“Otherwise we are happy putting our heads down to drive further value accretion through active asset management,” he asserts.
Late last week, The Australian reported that Mulpha had quietly listed the island resort on the market with price expectations of at least A$300mil.
However, whoever buys the asset would need to have lots of cash as up to A$80mil is required to refurbish the resort following the cyclone damage.
Bursa-listed Mulpha is one of largest real estate investors and developers in Australia.
Besides Hayman Island, Mulpha owns a few five-star hotels there such as the InterContinental Sydney and a resort-styled property development called Sanctuary Cove in northern Gold Coast.
It also has a 22.6% strategic stake in Aveo Group Ltd - Australia’s largest owner-operator and manager of retirement communities that was thrust into the news late last month following an expose alleging that it was prone to exploiting its residents when running its retirement villages.
Mulpha has denied the allegations, but the episode has wiped out close to one-fifth off Aveo’s market capitalisation, sparking speculation that the stock might be taken private.
Aveo’s market cap now stood at A$1.44bil, with Mulpha’s strategic block worth A$325.82mil.
As to whether privatisation is an option being considered for Aveo, Shaw says “it does not comment on market speculation.”
Outside Australia, the group has a strategic investment in the London Marriott Hotel Grosvenor Square, while in Malaysia, it is the developer of the 1,765-acre Leisure Farm in Iskandar Malaysia, Johor.
Although asset rich, Mulpha’s earnings have been volatile. For the first quarter ended March 31 (Q1FY17), its bottom line improved by more than two-thirds although it still posted a net loss of RM1.15mil. Pre-tax profit came in at RM7.4mil.
The company said the weaker performance was due to an impairment of RM33.30mil it had to make because of the damage from Cyclone Debbie on Hayman Island resort.
Revenue, meanwhile, was up by about 50% to RM309.27mil.
As at end March, the company’s total borrowings stood at RM2.42bil. Of this, RM1.23bil are short-term debts where RM927.81mil was to be paid in the first quarter of 2018.
According to the notes accompanying its Q1FY17 results, management has started negotiation on the refinancing of these loans.
Total cash and cash equivalents were RM316.80mil for that period.
Mulpha’s controlling shareholder is Lee Seng Huang and family with a 44.96% stake.
Its shares were last traded at RM2.30, giving it a market cap of RM706.36mil.