Singapore-listed Mandarin Oriental shares tumble after it scraps sale of Hong Kong's Excelsior

HONG KONG (BLOOMBERG) - Singapore-listed Mandarin Oriental International scrapped the sale of The Excelsior hotel in Hong Kong after bids failed to meet its expectations, a rare setback in a city where property prices have continued to hit fresh record highs.

The company's shares slumped as much as a record 32 per cent after surging 86 per cent through Tuesday since saying it would test interest in the property.

Mandarin Oriental will continue to review options for the 869-room hotel in the Causeway Bay shopping district, including redeveloping it into a commercial property, the company said in a pre-market statement on Wednesday (Sept 27).

The pulled sale could affect sentiment for pending transactions after a series of record-breaking land and commercial building deals in Hong Kong's red-hot property market. Champion Reit is exploring a sale of its Langham Place office tower with an asking price of HK$24.5 billion, while billionaire Li Ka-shing said in March that Cheung Kong Property was in talks for a sale of The Center.

The sale had the potential to set a record for a building in Hong Kong, after the HK$23.3 billion purchase in May by Henderson Land Development of the Murray Road carpark in Central for a tower development.

Vincent Cheung, a deputy managing director at Colliers International's valuation and advisory services department, had earlier estimated the hotel's value at HK$25 billion to HK$27 billion.

A consortium of Sun Hung Kai Properties and Hysan Development was among at least five bidders for the hotel, the Hong Kong Economic Journal reported earlier.

Mandarin Oriental said in June it was testing the market for a potential sale of the property on the waterfront overlooking Victoria Harbour in the light of "current strong commercial property valuations in Hong Kong". The government has approved redevelopment of the site for a commercial building with a gross floor area of 684,000 sq ft.

The Excelsior is on Lot No 1, the first land auctioned in Hong Kong in 1841, according to Singapore-listed Jardine Matheson Holdings, the owner of the Mandarin Oriental company. The hotel opened in 1972.

Mandarin Oriental operates 30 hotels and eight residences in 20 countries and territories. The group's hotels are all five-star luxury properties, with the exception of The Excelsior, which is four-star rated.