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Taking over this freehold land when the debtor defaulted, was a great move. But the big payday will be some time away, and from Chairman FF Wong's previous track record, OPMIs can look forward to a probable payday. As usual, do OPMIs have the temperament to do so?
BOUSTEAD FY2024 ANNUAL GENERAL MEETING ADVANCE QUESTIONS AND RESPONSES
In his message to shareholders, the Chairman indicated that the newly opened COMO Orchard at 28 & 30 Bideford Road will continue to be lossmaking in the near term due to high depreciation and interest costs. The Group’s share of results from Bideford House Pte Ltd in FY2024 was S$(10.0) million (FY2023: S$(1.3) million). Can management provide the occupancy rates at COMO Metropolitan Singapore? Was the investment thesis for 28 & 30 Bideford Road based on an assumption of low interest rates? Is the high depreciation of COMO Orchard typical for the hotel business and has management been taken by surprise by these depreciation and interest costs? What is the expected timeline for COMO Orchard to achieve breakeven and profitability?
COMO Orchard is a mixed-use asset – consisting of five commercial and retail floors for lease, and with the remaining floors under COMO Metropolitan Singapore, a hotel under a management contract with COMO. The commercial and retail floors are fully leased out. The hotel has been in operation since September 2023 and requires a longer period (i.e. a series of peak and low seasons) to ascertain average occupancy.
The investment in COMO Orchard was not based on low interest rate expectations and did assume larger losses in the initial years but with a medium-term plan to profitability. The high depreciation costs are unrelated to the property’s function as a hotel but are due solely to the cost of the development which is capitalised and the nature of the land which is freehold.
Due to accounting policy, management always expected this depreciation because it applies to all assets. Do note that this is a non-cash item and the gap to achieve cashflow breakeven and profitability is not as large as the accounting figures show. The Real Estate Solutions Division’s management is working closely with the hotel operator and tenants to improve the marketing efforts including awareness and outreach, and achieving stabilisation of the asset. This includes collaborations with DA MedSuites, COMO Shambhala, Cedric Grolet and other COMO Hotels and Resorts.
https://links.sgx.com/FileOpen/Boustead%...eID=812341
BOUSTEAD FY2024 ANNUAL GENERAL MEETING ADVANCE QUESTIONS AND RESPONSES
In his message to shareholders, the Chairman indicated that the newly opened COMO Orchard at 28 & 30 Bideford Road will continue to be lossmaking in the near term due to high depreciation and interest costs. The Group’s share of results from Bideford House Pte Ltd in FY2024 was S$(10.0) million (FY2023: S$(1.3) million). Can management provide the occupancy rates at COMO Metropolitan Singapore? Was the investment thesis for 28 & 30 Bideford Road based on an assumption of low interest rates? Is the high depreciation of COMO Orchard typical for the hotel business and has management been taken by surprise by these depreciation and interest costs? What is the expected timeline for COMO Orchard to achieve breakeven and profitability?
COMO Orchard is a mixed-use asset – consisting of five commercial and retail floors for lease, and with the remaining floors under COMO Metropolitan Singapore, a hotel under a management contract with COMO. The commercial and retail floors are fully leased out. The hotel has been in operation since September 2023 and requires a longer period (i.e. a series of peak and low seasons) to ascertain average occupancy.
The investment in COMO Orchard was not based on low interest rate expectations and did assume larger losses in the initial years but with a medium-term plan to profitability. The high depreciation costs are unrelated to the property’s function as a hotel but are due solely to the cost of the development which is capitalised and the nature of the land which is freehold.
Due to accounting policy, management always expected this depreciation because it applies to all assets. Do note that this is a non-cash item and the gap to achieve cashflow breakeven and profitability is not as large as the accounting figures show. The Real Estate Solutions Division’s management is working closely with the hotel operator and tenants to improve the marketing efforts including awareness and outreach, and achieving stabilisation of the asset. This includes collaborations with DA MedSuites, COMO Shambhala, Cedric Grolet and other COMO Hotels and Resorts.
https://links.sgx.com/FileOpen/Boustead%...eID=812341