'Snapped up' - and lost a fortune

[property]

According Today paper (April 17, 2009) the Raffles Hotel was 'snapped up' in 2005 by Colony Capital for 1,7 billion. It was later merged with FRHI, which is now putting the property back on the market for only 669 million.

In other words they lost a fortune. Then why would they still use the term 'snapped up'? Check up the word in the dictionary:


"snap something up: quickly and eagerly buy or secure something that is in short supply or being sold cheaply (e.g. all the tickets have been snapped up.)"


This term is often wrongly used by journalists and investors in SG property, which is not either sold cheaply or short of supply. 

Is the problem with their english skills or the mindset??

[unreal estate]

nope. It is due to your language skill and your mindset.

That was in 2005 - almost near the peak of the property cycle. $1.7 billion was considered "cheap" then - that's why it was "snapped up" (I know, in the wake of the global financial tsunami, it is a bit difficult to envisage the hot property market then, but you have to try to get yourself in that mindset.)

Likewise, if there is a property bull here and now, he will also "snap" up this property at $669 million - it does look like a huge bargain now compared to $1.7 billion. Then one or two year down the road, when it goes down to $400 million, you will again say:

Is the problem with their english skills or the mindset??

[yepper]

OP - you're silly.

'Snapped up' is perfectly appropriate in this context.

[snappy]

The days of snapping up are long gone.

Property is tanking big time

This time next year they will be worth even less, nobody is buying and everyones leaving. 

[jeez]

nope. It is due to your language skill and your mindset.

That was in 2005 - almost near the peak of the property cycle. $1.7 billion was considered "cheap" then - that's why it was "snapped up" (I know, in the wake of the global financial tsunami, it is a bit difficult to envisage the hot property market then, but you have to try to get yourself in that mindset.)

Likewise, if there is a property bull here and now, he will also "snap" up this property at $669 million - it does look like a huge bargain now compared to $1.7 billion. Then one or two year down the road, when it goes down to $400 million, you will again say:

Is the problem with their english skills or the mindset??

you cant be serious right?...are you?...

[boo hoo]

Sure they'll lose money, but the S$1.7 bil is for a whole portfolio of hotels not just the Raffles Hotel.

[Give it a break mate]

In other words they lost a fortune. Then why would they still use the term 'snapped up'? Check up the word in the dictionary:

Is the problem with their english skills or the mindset??

If you look hard at anything that anyone writes you will eventually find something to criticize. This is what we call nitpicking. If you do it often enough, it becomes a habit and soon you find yourself finding fault with everything. These journos that write these articles are just like you and me, generally hard working people trying to make a living. So give em a break.

[OP]

Sure they'll lose money, but the S$1.7 bil is for a whole portfolio of hotels not just the Raffles Hotel.

Nope, 1.7 billion for the Raffles and the shopping arcade...

[check your facts]

the S$1.7 bil is for a whole portfolio of hotels not just the Raffles Hotel.

Nope, 1.7 billion for the Raffles and the shopping arcade...

Colonial icon Raffles Hotel sold to Colony Capital


AP, SINGAPORE
Tuesday, Jul 19, 2005, Page 12
Singapore's iconic 117-year-old Raffles Hotel has been sold, along with 40 other hotels and properties worldwide to US-based investment fund Colony Capital LLC for S$1.72 billion (US$1 billion), including debt, former parent Raffles Holdings Ltd said yesterday.

The deal includes all 41 hotels and resorts around the world marketed under the Raffles and Swissotel brand names.

[Splat]

I hate the term "snapped up."  It has that "quick buy now without thinking or you will miss the boat" negative energy to it.

[boo hoo]

That's why the property agents and the property journos (wonder if any of them have conflict of interest) love using them. You certainly don't read "investors snap up Citibank shares" when it rallies.

Another word  loved by journos, agents and developers is "taking a breather"

[boo hoo]

One of my mates "snapped up" a few units of St Regis and Orchard Residences. Now his sanity is also "snapping".

[RE]

One of my mates "snapped up" a few units of St Regis and Orchard Residences. Now his sanity is also "snapping".

Good one 

[hotel.sexpert]

Let's attempt to value the 41 properties as they stood in 2005.

The rule of thumb in the hotel industry for valuing a hotel is - room rate should be 0.1% of the replacement cost of a room. In other words, it you can charge $300 a night, the break-even cost of construction one room should be about $300,000.

Based on a generous S$1,000 per night for the Raffles Hotel, its 103 rooms would be valued at S$103 million. Throw in another S$97 million for its commercial spaces such as shops and restaurants, etc.  Throw in another S$128 million for the Raffles brand name (a brand premium of 64%), bringing the total value to S$328 million.

Assume that its 45% stake in Raffles City Complex is worth another S$200 million.
Assume the other 13 hotels owned are worth S$100 million each = S$1,300 million.
Assume the 27 hotels under management are worth S$10 million each - S$270 million

So, total for the 41 properties = S$328 + S$200 + S$1,300 + S$270 = S$2,098 million
Now, compare that to the sale price of S$1,720 million (US$1 billion) which included a debt of S$270 million - it would appear that S$1.72 billion WAS a bargain and would be snapped up.

Also, consider that Colony Capital has more than US$39 billion in investment assets, a mere US$1 billion purchase will be snapped up in the blink of an eye.

Now, assuming the sale price of $669 million for Raffles Hotel is in Sing Dollar and not US dollar, it will still be much higher than the S$328 million in 2005.  The gain is even more significant in US$ terms. It was valued at US$190 million (at 1US$ = S$1.72). Now, it is valued at US$444 million (at 1US$ = S$1.507).

In fact, Colony Capital more than doubled their money for this particular hotel (Raffles Hotel) out of the original portfolio of 41 hotels (14 owned and 27 managed).  They were correct to SNAP up those properties for a measly US$1 billion only.

* * *

Raffles Holdings and Colony Capital Win Prestigious Deal of the Year Award

SINGAPORE, 14 OCTOBER 2005

Colony Capital, LLC and Raffles Holdings Limited are very pleased to announce that they have been awarded the prestigious ‘Deal of the Year’ award at the 16th annual Hotel Investment Conference Asia Pacific (HICAP) in Hong Kong today.

The transaction between Colony Capital, LLC and Raffles Holdings Limited to purchase the latter’s entire hotel business for an enterprise value of S$1.72 billion was closed last month and included the acquisition of all 41 hotels of Raffles Holdings (14 owned and 27 managed).

Organised by leading hotel, tourism and leisure consulting firm, Horwath Asia Pacific together with Sonnenblick-Goldman Company and Burba Hotel Network, HICAP is an annual event that sees the gathering of Asia’s top hotel industry leaders, investors and financiers.

Colony Capital, LLC, is a leading international investment fund with more than 14 years of experience investing in global hospitality assets while Raffles Holdings is a Singapore-listed company that has a 45% direct equity interest in Tincel Properties (Private) Limited, which owns Raffles City Complex, a multi-use development located in Singapore’s prime business district which the Company manages. From the deal, Raffles Holdings received S$1.45 billion aggregate consideration in cash for its equity interest. Based on the pro forma net tangible assets (“NTA”) of the Hotel Business as at 31 December 2004, the aggregate consideration implies a 64% premium to NTA and gross proceeds of S$0.69 per Raffles Holdings share.

Present at the award ceremony were Mr. Grant L. Kelley, CEO of Colony Capital Asia Limited and Ms. Leong Wai Leng , Deputy CEO of Raffles Holdings Limited.

Mr. Kelley said, “We are ecstatic that our move to purchase Raffles Holding’s Hotel Business has been recognised as the year’s most prominent hotel deal by the industry. With its outstanding brand assets and a team of talented staff, Raffles International fits well into our overall strategy of building a major world-class hospitality organization that can serve increasingly sophisticated customer needs. With the successful completion of the deal last month, we will now build on the existing strengths of Raffles International and leverage on the resources, networks and products to ensure the continued growth of the Raffles and Swissôtel brands over the years ahead.”

Commenting on the award, Ms. Leong said: “We are delighted to be presented with this world-class award, and to have the deal accorded the highest level of recognition by top hotel industry leaders, despite being pitted against other high-profile international deals. This award is the culmination of many months of dedication, hard work and spontaneous teamwork by our fellow colleagues. We believe that the deal best exemplifies a win-win situation for both Raffles Holdings and Colony Capital where each found great value in the transaction.”

Ms. Jennie Chua, President & CEO of Raffles Holdings Limited, added: “The deal has allowed us to achieve the twin objectives of placing the Hotel Business on an even stronger platform for further growth and development and at the same time, allowed the Group to unlock significant value for shareholders.”

“It is an honor to be recognized by our highly esteemed peers at this important industry event,” said Thomas J. Barrack, Chairman and CEO of Colony Capital.

[boo hoo]

Hotel expert, your analysis is so flawed on so many levels that its hilarious.