This article first appeared in The Edge Malaysia Weekly on August 9, 2021 - August 15, 2021

JOHOR state-owned investment arm Johor Corp (JCorp) is set to take another step in its restructuring drive by selling at least two of its hospitality assets, sources say. The Edge understands that it is looking for buyers for The Puteri Pacific Hotel in Johor Baru and Hotel Selesa Pasir Gudang, which could fetch a combined RM160 million.

The Puteri Pacific Hotel closed down for good on Aug 30 last year during the Covid-19 pandemic after operating for 29 years, while Hotel Selesa Pasir Gudang ceased operations in 2017 after 25 years.

The last time JCorp divested three of its hotel assets was in 2017 and 2014.

If it materialises, the sale of The Puteri Pacific Hotel and Hotel Selesa Pasir Gudang will place the group closer to a potential exit from the hospitality sector, which has been one of the hardest hit due to the pandemic.

Real estate and infrastructure are among JCorp’s core engines of growth, JCorp’s head of corporate communications Hasnina Hafiz tells The Edge when contacted to confirm the sale.

“We continue to refresh and review our property portfolio and property investments with a view to strengthen our investment portfolio. Given that our management of investments is dynamic, it is imperative for us to continually reposition, repurpose and rebalance the portfolio to ensure optimum returns,” she adds.

“Safeguarding the long-term interests of our key stakeholders is always a priority when we consider our investments. Given the strong value proposition and quality of the assets within our portfolio, we expect to see attractive yields from our investments, which will contribute to JCorp’s aim to continue generating sustainable returns.”

Checks by The Edge show that there are at least two advertisements by real estate agents — a YouTube ad by Zerin Properties and another on iProperty.com.my by CBRE | WTW — inviting offers for the two assets.

Spanning 1.87 acres of freehold land, The Puteri Pacific features a 20-storey building located on Jalan Abdullah Ibrahim. The four-star hotel has 424 rooms. Both real estate agencies quoted RM140 million for the asset. From 1992 to 2005, the hotel operated as the Pan Pacific Johor Baru.

The Puteri Pacific hotel, according to the CBRE | WTW ad, comes with 200 covered car park bays and a skybridge that links to Persada Johor International Convention Centre, another property owned by JCorp.

The closing date for submission of offers was stated as June 28, 2021, but it is understood that the hotel has yet to be sold. The ad was still up on the website as at Aug 4.

The ad by Zerin Properties, meanwhile, highlights that the hotel offers refurbishment potential to be a leading five-star property.

As for the Selesa Pasir Gudang hotel, the CBRE | WTW ad states that the five-storey building, located on a nine-acre parcel, comprises 180 rooms and comes with 170 uncovered car park bays.

The 29-year-old asset is a leasehold property, with 63 years of the lease remaining. It is learnt that RM21 million is the asking price for the asset, which was operated as a three-star property until 2017.

It remains unclear if JCorp plans to let go of its convention centre — located adjacent to the hotel— that is likely to be used as a vaccination centre (PPV) at least until October.

In 2014, Selesa Beach Resort in Port Dickson was sold to Felda Investment Corp while Damansara Reit Managers Sdn Bhd, a subsidiary of JCorp, sold Hotel Selesa Johor Baru and Menara Metropolis for RM125 million to Smartwheels Group.

Based on the latest available results filed with the Companies Commission of Malaysia, JCorp Hotels and Resorts Sdn Bhd, which owns the hospitality division, saw its net loss narrow to RM11.05 million in the financial year ended Dec 31, 2019 (FY2019), from RM15.5 million in the previous year. Revenue for FY2019 declined 67.6% to RM9.97 million from RM30.73 million in FY2018.

Last week, The Edge, quoting sources, reported that the Johor state investment arm was in the midst of a large-scale restructuring exercise, including a full-scale review of its business ventures.

Maybank Investment Bank Bhd and CIMB Investment Bank Bhd are said to be assisting with the restructuring of JCorp, which had RM23.28 billion in assets as at end-December 2019.

JCorp was quoted as saying that as a major investment holding institution with core businesses in the Malaysian economy, it is continuously reviewing and assessing its investments with a view of strengthening its investment portfolio.

In FY2019, JCorp had cash and bank balances of RM1.14 billion while long-term borrowings totalled RM1.23 billion. Its total liabilities stood at RM14.23 billion.  

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