Savoy settles Hyatt deal for $40 million

By Bob Dey

Jihong Lu's private Savoy interests have settled the $40 million purchase of the Hyatt Regency Hotel in Auckland and are offering the listed Savoy Equities an option to buy into the deal.

Under the option, which Savoy Equities can exercise up to December 3, it would pay $3.5 million for 47.5 per cent of the private company which signed to buy the hotel and neighbouring development site, Hudson-Savoy Holdings Ltd.

Assuming Savoy Equities buys in, it would hold a stake equal to that taken already by Hudson Investment Group, a listed Australian company in which Mr Lu and associated parties hold 15 per cent of the shares.

Savoy Capital Assets, a private Lu company, holds 52.5 per cent of the joint venture and would sell down to 5 per cent.

Mr Lu said on Friday he had an obligation to offer the public company the right to be involved in new ventures, but this was too big a transaction for Savoy Equities to enter into without going to a shareholder meeting, and the seller wanted a quick buyer decision.

The acquisition has been financed by HSBC and South Canterbury Finance. Mr Lu said a date was not yet set for a Savoy Equities shareholder meeting, but he expected it would be in four or five weeks.

Savoy signed in May to buy the 273-room hotel, on 5800 sq m at the corner of Waterloo Quadrant and Princes St, and additional 5200 sq m of land running down to Eden Cres.

Mr Lu said Landplan Group was working on development plans, which would include an upmarket Hyatt Residence style of accommodation, that could be either owner-occupier or serviced apartments. He expected the units would be sold, but managed by the hotel.

The site includes the Princes Court office building, the art deco Eden Hall flats and parking behind the hotel. Mr Lu said some of the site would be used for commercial development and the first stage of the mixed-use project should be launched in about two months.

The development land has been valued at about $7 million, or $1350 a sq m, which puts a price tag of about $120,000 a room on the hotel.