Hotel Sahid to build new hotel, offices and apartments

The Jakarta Post, Jakarta

Publicly listed star-rated hotel chain PT Hotel Sahid Jaya International Tbk. is set to expand its business by building a new hotel, and office and apartment buildings in Jakarta at a total cost of Rp 1.82 trillion (US$200 million) next year.

Finance director Muhammad Nurdin said Wednesday that the company would start the construction of the hotel and office towers, to be called the Sahid Perdana, early next year. The construction work was expected to be completed by the end of 2009.

To finance the hotel and office towers project, estimated to cost Rp 1.2 trillion, the company plans to launch a rights issue worth Rp 541 billion this year, he said.

"We will also list our company on the Singapore Stock Exchange due to the better prospects for property businesses there," Nurdin announced after the company's annual shareholders meeting.

He said the company was also likely to either issue bonds or seek loans to help finance the project.

"We haven't decided whether to raise the funds solely from the rights issue, or whether to issue bonds or take out loans," he said.

He added that the company would also use the proceeds from the sales of office and apartment units to fund the development.

He said that besides Sahid Perdana project, Sahid was also collaborating with property developer Pikko Group to build the Sahid Sudirman Residence complex with 675 apartments starting May.

As part of the Rp 560 billion development, Sahid would provide 6,700 square meters of land, while Pikko would be responsible for the physical construction of the building and infrastructure. Both companies have agreed to split their earnings, with Sahid getting 45 percent.

Muhammad said that Sahid would also renovate its flagship Sahid Jaya Hotel in Central Jakarta this year.

"We have applied for a Rp 150 billion loan from Bank Mega based on an annual interest rate of 15 percent and a maturity of six-and-a-half years," Nurdin said.

He explained that Rp 80 billion from the loan would be used for the renovation of the Sahid Jaya, and the remaining Rp 70 billion to repay its debts to Bank Mandiri.

The company expects a 9.1 percent increase in revenue this year to Rp 98.1 billion from Rp 89.9 billion last year, and a 17.03 percent decrease in operating costs to Rp 64.8 billion from Rp 78.2 billion previously.

Currently, it operates 17 hotels in Sumatra, Java, Bali, Lombok and Sulawesi.