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sumer wrote: Sieving through the offer document for HPL, some of the valuations of the company’s assets look much lower than what I would expect. Shareholders will have to decide if these valuations are indeed fair.
Here are just some valuations which seem to be rather low, in my opinion:
1. Hilton Hotel is valued at $530m, or $1,238 psf of GFA while Four Seasons Hotel is valued at $365m, or $974 psf of GFA. Both are FH properties. As a comparison, Oxley Holdings’ redevelopment of Pine Tree Club at Stevens Road (not as prime, and leasehold 103 years) has a GDV of $1.023b, or $3,215 psf of GFA. Opposite Hilton Hotel is also Hong Fok’s new hotel project, which is valued at $3,768 psf of GFA (based on $650m GDV).
Assuming that HPL later redevelops both hotels and achieve a GDV of $3,500 psf of GFA, this implies a new valuation of $2.8b for the 2 sites. Further assuming a redevelopment cost of $600m, this means that the total “cost” to HPL is $895m (the 2 sites’ current valuation) + $600m = $1.495b vs the new GDV of $2.8b, giving a surplus value of $1.3b or $2.52 per share.
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