GPT hotel sales to drag into next year
GPT Group’s effort to offload its $800 million hotel portfolio will drag into 2009, because of the economic downturn.
The economic conditions made it “difficult to determine a sales timeframe”, the company said.
The struggling property trust has also warned that it will “most likely” be forced into talks with banks next month over its joint venture with Babcock & Brown as properties are revalued.
And a deal involving a potential sale of one of the joint venture’s retail assets may collapse.
This comes after its debt-crippled investment banking partner Babcock & Brown this week announced a strategic exit from real estate and revealed that the joint venture faced a potential loss of about $128 million on a debt facility with US bank Wachovia.
GPT has $1.7 billion worth of properties for sale, with the $250 million Four Points Sheraton at Sydney’s Darling Harbour being described as the “jewel of the crown” in its $800 million tourism portfolio.
Agents had previously said the sale of Sydney’s Four Points would probably conclude by this month, and expressions of interest for the Ayers Rock Resort at Uluru were to close last month.
But in an update to the market yesterday, GPT Group said the disposal of its tourism portfolio was progressing.
Separate sales programs were under way for the Four Points Hotel and Voyages resorts.
There were also a number of homemaker assets being marketed for sale.
Interest in asset sales was varied.
“Reflecting increasingly challenging market conditions, it is expected the process will continue into 2009,” GPT said.
“We are operating in a market that is not normalised, so things tend to take a bit longer,” hotel tourism portfolio manager Bruce Morris said.
Mr Morris said GPT was “relaxed” about the timeline.
GPT Group said also that it had sold two German retail assets in its joint venture with Babcock & Brown for about $85 million, but another likely sale could be under threat.
The $6.6 billion joint venture with Babcock & Brown involved bank debt of $5.1 billion.
More than half the assets are in Germany.
GPT’s joint venture includes $1.7 billion worth of German residential assets, $871 million of European industrial assets, $605 million worth of European retail assets, and $875 million of US retail assets. Property and loans in the US make up the remainder.
GPT’s security price closed down 0.5c to $1.04, from highs of more than $2.50 in April.
Babcock & Brown remained in a trading halt.
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