Singapore Based Fund Buys Laguna Beach Resort

The 252 room Laguna Beach Resort has transacted to Singapore private equity fund RECAP according to documents filed with the Stock Exchange of Thailand. Located in the leading integrated destination resort Laguna Phuket the property was opened in 1991.
The transaction which was approved by the Board of Directors is for the sale of Laguna Resorts and Hotels 60% shareholding in Laguna Beach Club Limited for THB723.565 million. LRH's joint venture partner RHI Group Pte. Ltd. will also sell its shareholding in the company and subsidiaries.
Conditions precedent are in effect which call for a completion date for the final transaction on or before May 10,2011.
The property first debuted as Pacific Islands Club, part of DFS (Duty Free Shoppers) billionaire co-founder Chuck Feeney's resort chain. It later changed names to the present resort moniker.
A co-ownership structure has existed between developer Thai listed Laguna Resorts and Hotels Public Company Limited and InterPacific Group Ltd.
Real Estate Capital Partners (RECAP) which was established in 2004 has investments in Japan, Korea, China, Hong Kong, Singapore and Thailand. In 2006 it acquired a controlling interest in Phuket Square Company Limited which is the owning company of Phuket Jungceylon shopping, retail and hotel complex in Patong.
Leading hospitality brokerage Jones Lang LaSalle Hotels from Singapore conducted a bidding process on behalf of the ownership group. A key attraction for buyers had been the condition of vacant possession which translated into an upside opportunity to brand with an international operator.
Earlier in the year the Laguna's listed entity sold the 5-star 226 room Dusit Thani Laguna Phuket for THB2,620 billion to Dusit Thani Public Company Limited.
The later has recently announced plans to inject the resort into new THB4 billion property fund in tandem with two other Dusit managed assets. Advisory firms Kim Eng Securities (Thailand) and CIMB Securities (Thailand) have been retained by the group.
At the time of the divestment of the Dusit, Laguna Resorts and Hotels commented both to the stock exchange and the media that the transaction was meant to reduce what was considered as over exposures to the risks associated to the Phuket and Thai tourism market. Furthermore that proceeds would be spent on hospitality investment outside of the country along with paying down debt and or dividends to shareholders.
LRH and its affiliates continue to own or control the Banyan Tree Phuket, Sheraton Grande Laguna Phuket, Laguna Holiday Club and Banyan Tree Phuket.
Laguna Beach Resort which has operated as an independent has seen significant market share erode with a growing concentration of new international hotels and decline by the properties age. In 2009 the listed company reported that the resort contributed 11.39% in hotel wide turnover amongst the groups hospitality assets and in 2010 H1 (January through June) 13.25%.
The transaction comes on the heels of the recent announcement by Laguna Resort and Hotels who are set to close the 419 room Sheraton Grande Laguna Phuket in the middle of the year. An agreement was reached with Starwood Hotels and Resorts Worldwide, that winds down the management agreement, and the property would be reopened as under the Banyan Tree affiliated Angsana brand on the first of December. A THB500 renovation program has been earmarked for the property.
Hospitality transaction activity on the island remains a key highlight in the industry at present with another large international hotel currently in the market with expectations for a transaction to be finalized by the second quarter of this year.