The prevailing international climate of uncertainty in the financial markets is both good and bad for International Hotels Investments plc, which can benefit by acquiring property at "attractive prices" but has to wait for better times before listing on the London School Exchange.
IHI, a subsidiary of the Corinthia Group, is an investor, developer and operator of upscale hotels in Europe, Africa and the Middle East.
IHI chairman and CEO Alfred Pisani told shareholders: "With property prices under stress and bank financing not as readily available to developers, this is a time for companies with strong balance sheets and cash reserves, such as IHI, to look out for hotels that may forcibly come onto the market at attractive prices. Acquiring now, in this downturn, would give us sufficient time to organise and complete refurbishment or development projects during what is expected to be a depressed period over the next year or so and to launch new projects within a couple of years in time for what one expects to be an upturn in the international mood".
IHI must remain conscious of the global situation and ensure that timing and valuations remain correct, prudent and in line with the prevailing international markets.
With this in mind IHI is seeking to strengthen its value by listing on the London Stock Exchange. Mr Pisani said the company was in the process of finalising the terms of appointment of a leading international investment bank that will be advising it on this listing. "Our objective is principally to list our shares on an exchange, which will provide liquidity in trading, as well as further reinforce our overall valuation," he told shareholders last week.
Mr Pisani said detailed groundwork for the listing will be done over the coming months. The precise timing of the listing will continue to be closely monitored by the board of directors since "we must remain watchful of the prevailing market conditions on the international financial markets before taking such an important step. We shall be consulting our shareholders in due course with the objective of determining the optimum timing and pricing for the listing".
Mr Pisani was speaking at the company's annual general meeting when he described the annual report for 2007 as remarkable for IHI.
IHI now stands at the threshold of becoming a billion-euro public company. "Having founded IHI with relatively modest resources in March 2000, this truly is a significant milestone in the history of our company. The year 2007 was an especially important year for IHI, characterised by a quantum leap in all aspects of its business," Mr Pisani noted.
The company tripled its issued share capital to over €537 million and in the process welcomed Nakheel Hotels of Dubai as a strategic shareholding partner and increasingly consolidated its involvement in the hotel management business by augmenting its shareholding in CHI Ltd, the management company, from a minority position to a 70 per cent shareholding.
Mr Pisani said that 2007 was a watershed year for IHI and he wished to "express my appreciation for the commitment and support we have received from Nakheel Hotels of Dubai, formerly Istithmar Hotels. It is exactly one year since Nakheel Hotels acquired a one- third shareholding in IHI by way of a capital injection of €178 million. Over the past 12 months, Nakheel Hotels, and its directors on the board of IHI, have demonstrated a significant level of dedication and collaboration.
Indeed, Nakheel is just as passionate about the company and equally passionate to ensure that all our investments are keenly pursued and that all our projects are pitched at the highest standards. Nakheel has also consistently extended its expertise, its contacts and global reach thereby opening new opportunities for us to explore.
"Likewise, I would also wish to thank CPHCL and its ultimate shareholders, including the Pisani families and LFICO, for their relentless support and commitment. In 2007, CPHCL has invested a further €192 million in new equity issued by IHI."
Nakheel and LFICO are supporting IHI beyond their own shareholding in IHI, making it possible for IHI to identify hotel projects such as the London acquisition that would not have been possible to pursue on its own steam.
Mr Pisani said that in London, IHI is now in the throes of finalising its designs and project plans to transform the acquisition of the two buildings into what will be London's foremost luxury Corinthia Hotel with 285 bedrooms, a historic ballroom, conference and meeting facilities, speciality restaurants, a spa and a number of high-quality apartments for sale. The projected completion date for the project is 2010.
The same approach is being applied to other acquisitions in the pipeline.
"In Libya, IHI has entered into an agreement with LFICO to develop a major project in a central location in Benghazi, the country's second city. The project is in the planning phase and will include a 360-bedroom luxury hotel, offices for rent to third parties and apartments for sale."
Elsewhere, IHI is in active discussions to identify hotels for acquisition or development in some of the world's major cities, including New York, Paris, Moscow and other cities in emerging destinations.
In 2007, IHI expanded its portfolio of owned hotels and commercial real estate by acquiring the 100 per cent ownership of landmark hotel and commercial properties in Prague and Tripoli. These are the 551-bedroom Corinthia Hotel in Prague and the 300-bedroom Corinthia Bab Africa Hotel & Commercial Centre in Tripoli, Libya. "The impact of these two hotels on our income statement in 2007 is remarkable, especially when one notes that these properties were incorporated in IHI in May and, consequently, their contribution to its financial results are solely based on seven months of the year."
Throughout 2007, IHI continued with its capital investments in existing hotels and this with the aim of establishing the hotels as leaders in the luxury segment in their respective cities.
Mr Pisani singled out the property in St Petersburg where, he said, work has progressed significantly at the 285-bedroom Corinthia Nevskij Palace Hotel, where the existing hotel's public areas, restaurants, spa and foyer are being refurbished and three adjoining buildings are being reconstructed.
One of the buildings will house an element of high-street top-end fashion retail shops as well as an additional 105 executive bedrooms plus St Petersburg's most modern and largest conference rooms.
Another building will feature a 15,000-square-metre retail mall and offices for rent to third parties and the third consists of a multi-storey car park and a further 1,200 square metres of offices for rent.
The existing hotel will be totally refurbished by next month and the extensions and new buildings will be phased in stages by the end of 2008 and early 2009. The total project cost is anticipated to be just under €100 million. "When considering the original acquisition price of these various properties in 2002, and the income to be generated upon completion of the development, one would immediately appreciate the substantial capital gains IHI would have achieved in St Petersburg."
Other capital investment projects in 2007 included the construction of a 1,000-square-metre spa at the 517-bedroom Corinthia Hotel in Lisbon and the refurbishment of 237 bedrooms in the hotel.
In Malta, IHI last year completed the refurbishment of the Corinthia Hotel in St Julians, where, Mr Pisani reported, the results speak for themselves. Room rates are up and so are the profits. "I am confident of Malta's future in the leisure, corporate and conference sectors, and the Corinthia Hotel St Julians, with its excellent location and pristine condition, will continue to partake in this upswing in the country's overall performance."
In reviewing the performance for 2007, Mr Pisani took note of the significant company restructuring that has taken place in CHI Ltd, the management company. In 2006, IHI increased its shareholding in CHI from 20 per cent to 70 per cent and simultaneously Wyndham Hotels Group International of the United States acquired the remaining strategic shareholding. CHI is licensed to operate hotels under the Corinthia, Wyndham and Ramada Plaza Brands in Europe, Africa and the Middle East.
The increase in the number of operating agreements signed last year augurs well for the future of this relationship, Mr Pisani said. These include a 173-room Ramada Plaza Hotel in Liverpool, scheduled to open in 2010; a 418-room Wyndham Port Lixus Resort Hotel in Morocco, with a planned opening date in mid-2010; a 371 all-suite Ramada Plaza Hotel & Suites in Jumeirah Beach, Dubai, planned to open in 2009; a 274-room Corinthia Algiers Hotel in Algiers, planned to open in 2010; and a Corinthia Lake Resort and Spa Hotel in Bucharest, scheduled to open next year.
IHI, a subsidiary of the Corinthia Group, is an investor, developer and operator of upscale hotels in Europe, Africa and the Middle East.
IHI chairman and CEO Alfred Pisani told shareholders: "With property prices under stress and bank financing not as readily available to developers, this is a time for companies with strong balance sheets and cash reserves, such as IHI, to look out for hotels that may forcibly come onto the market at attractive prices. Acquiring now, in this downturn, would give us sufficient time to organise and complete refurbishment or development projects during what is expected to be a depressed period over the next year or so and to launch new projects within a couple of years in time for what one expects to be an upturn in the international mood".
IHI must remain conscious of the global situation and ensure that timing and valuations remain correct, prudent and in line with the prevailing international markets.
With this in mind IHI is seeking to strengthen its value by listing on the London Stock Exchange. Mr Pisani said the company was in the process of finalising the terms of appointment of a leading international investment bank that will be advising it on this listing. "Our objective is principally to list our shares on an exchange, which will provide liquidity in trading, as well as further reinforce our overall valuation," he told shareholders last week.
Mr Pisani said detailed groundwork for the listing will be done over the coming months. The precise timing of the listing will continue to be closely monitored by the board of directors since "we must remain watchful of the prevailing market conditions on the international financial markets before taking such an important step. We shall be consulting our shareholders in due course with the objective of determining the optimum timing and pricing for the listing".
Mr Pisani was speaking at the company's annual general meeting when he described the annual report for 2007 as remarkable for IHI.
IHI now stands at the threshold of becoming a billion-euro public company. "Having founded IHI with relatively modest resources in March 2000, this truly is a significant milestone in the history of our company. The year 2007 was an especially important year for IHI, characterised by a quantum leap in all aspects of its business," Mr Pisani noted.
The company tripled its issued share capital to over €537 million and in the process welcomed Nakheel Hotels of Dubai as a strategic shareholding partner and increasingly consolidated its involvement in the hotel management business by augmenting its shareholding in CHI Ltd, the management company, from a minority position to a 70 per cent shareholding.
Mr Pisani said that 2007 was a watershed year for IHI and he wished to "express my appreciation for the commitment and support we have received from Nakheel Hotels of Dubai, formerly Istithmar Hotels. It is exactly one year since Nakheel Hotels acquired a one- third shareholding in IHI by way of a capital injection of €178 million. Over the past 12 months, Nakheel Hotels, and its directors on the board of IHI, have demonstrated a significant level of dedication and collaboration.
Indeed, Nakheel is just as passionate about the company and equally passionate to ensure that all our investments are keenly pursued and that all our projects are pitched at the highest standards. Nakheel has also consistently extended its expertise, its contacts and global reach thereby opening new opportunities for us to explore.
"Likewise, I would also wish to thank CPHCL and its ultimate shareholders, including the Pisani families and LFICO, for their relentless support and commitment. In 2007, CPHCL has invested a further €192 million in new equity issued by IHI."
Nakheel and LFICO are supporting IHI beyond their own shareholding in IHI, making it possible for IHI to identify hotel projects such as the London acquisition that would not have been possible to pursue on its own steam.
Mr Pisani said that in London, IHI is now in the throes of finalising its designs and project plans to transform the acquisition of the two buildings into what will be London's foremost luxury Corinthia Hotel with 285 bedrooms, a historic ballroom, conference and meeting facilities, speciality restaurants, a spa and a number of high-quality apartments for sale. The projected completion date for the project is 2010.
The same approach is being applied to other acquisitions in the pipeline.
"In Libya, IHI has entered into an agreement with LFICO to develop a major project in a central location in Benghazi, the country's second city. The project is in the planning phase and will include a 360-bedroom luxury hotel, offices for rent to third parties and apartments for sale."
Elsewhere, IHI is in active discussions to identify hotels for acquisition or development in some of the world's major cities, including New York, Paris, Moscow and other cities in emerging destinations.
In 2007, IHI expanded its portfolio of owned hotels and commercial real estate by acquiring the 100 per cent ownership of landmark hotel and commercial properties in Prague and Tripoli. These are the 551-bedroom Corinthia Hotel in Prague and the 300-bedroom Corinthia Bab Africa Hotel & Commercial Centre in Tripoli, Libya. "The impact of these two hotels on our income statement in 2007 is remarkable, especially when one notes that these properties were incorporated in IHI in May and, consequently, their contribution to its financial results are solely based on seven months of the year."
Throughout 2007, IHI continued with its capital investments in existing hotels and this with the aim of establishing the hotels as leaders in the luxury segment in their respective cities.
Mr Pisani singled out the property in St Petersburg where, he said, work has progressed significantly at the 285-bedroom Corinthia Nevskij Palace Hotel, where the existing hotel's public areas, restaurants, spa and foyer are being refurbished and three adjoining buildings are being reconstructed.
One of the buildings will house an element of high-street top-end fashion retail shops as well as an additional 105 executive bedrooms plus St Petersburg's most modern and largest conference rooms.
Another building will feature a 15,000-square-metre retail mall and offices for rent to third parties and the third consists of a multi-storey car park and a further 1,200 square metres of offices for rent.
The existing hotel will be totally refurbished by next month and the extensions and new buildings will be phased in stages by the end of 2008 and early 2009. The total project cost is anticipated to be just under €100 million. "When considering the original acquisition price of these various properties in 2002, and the income to be generated upon completion of the development, one would immediately appreciate the substantial capital gains IHI would have achieved in St Petersburg."
Other capital investment projects in 2007 included the construction of a 1,000-square-metre spa at the 517-bedroom Corinthia Hotel in Lisbon and the refurbishment of 237 bedrooms in the hotel.
In Malta, IHI last year completed the refurbishment of the Corinthia Hotel in St Julians, where, Mr Pisani reported, the results speak for themselves. Room rates are up and so are the profits. "I am confident of Malta's future in the leisure, corporate and conference sectors, and the Corinthia Hotel St Julians, with its excellent location and pristine condition, will continue to partake in this upswing in the country's overall performance."
In reviewing the performance for 2007, Mr Pisani took note of the significant company restructuring that has taken place in CHI Ltd, the management company. In 2006, IHI increased its shareholding in CHI from 20 per cent to 70 per cent and simultaneously Wyndham Hotels Group International of the United States acquired the remaining strategic shareholding. CHI is licensed to operate hotels under the Corinthia, Wyndham and Ramada Plaza Brands in Europe, Africa and the Middle East.
The increase in the number of operating agreements signed last year augurs well for the future of this relationship, Mr Pisani said. These include a 173-room Ramada Plaza Hotel in Liverpool, scheduled to open in 2010; a 418-room Wyndham Port Lixus Resort Hotel in Morocco, with a planned opening date in mid-2010; a 371 all-suite Ramada Plaza Hotel & Suites in Jumeirah Beach, Dubai, planned to open in 2009; a 274-room Corinthia Algiers Hotel in Algiers, planned to open in 2010; and a Corinthia Lake Resort and Spa Hotel in Bucharest, scheduled to open next year.