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CFO Koh Seng Geok. File picture.» What is the future capex for hotels? A shareholder noted that the capex has jumped from S$7.8 million in FY13 to S$43.4 million in FY2014. CFO Koh Seng Geok said the increase was attributable to the acquisition of a hotel in Kyoto and land in Phuket.
Going forward, the land in Phuket would need up to S$20 million to develop into a resort while the Kyoto hotel, up to $8 million to refurbish it.
The Kyoto hotel, which is vacant now, is expected to re-open for business by year-end while the Phuket site will need up to two years of redevelopment.
First, giving the thinking behind the expansion of the hotel business, Mr Teo said Roxy is building up its recurring income base.
In Australia, its partnership with Aviva will seek to to acquire and own a series of hotel development opportunities in key cities in Australia. A modular completion method will speed up the construction of the hotels.
While they will offer recurring income, the assets could also be spun-off as a REIT, he said.
Mr Chris Teo, the executive director overseeing the hotel segment, said the target destinations are stable and mature in terms of tourism arrivals.
Shareholders tucking into a spread of food after the AGM last Friday. NextInsight photo» NAV is 33.54 cents but Adjusted NAV is 72.11 cents a share. How is this derived? CFO Koh Seng Geok explained that the Grand Mercure Roxy hotel is recorded at historical cost in the books. Its book value is about $90 million after depreciation. The market value of the hotel was $553 million as at end-2014.
The "revaluation surplus" (which is the difference between the market value and book value of the hotel) is then divided by the outstanding shares of Roxy and the result added to the NAV to get Adjusted NAV.
Roxy's investment properties (in Roxy Square and in Sydney), on the other hand, have market values that are captured in the NAV of Roxy. Mr Koh said the hotel is not classified as an investment property but as a "fixed asset".
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