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Orient Express has recently declared selling of two assets that no longer fit well with the company’s growth strategy. Separately, the company also announced the re-opening of refurbished Copacabana Palace and its intention to revamp two of its top-producing assets through re-investment. The company has taken these strategic initiatives to raise its earnings and strengthen its balance sheet.
Highlighting its divestment plans further, the company has recently concluded the sale of The Westcliff, Johannesburg to joint venture partners Albwardy Investment in Dubai and Hotels Properties Limited in Singapore. Following the completion of the asset sale, the company will be engaged in managing the operations of the sold property for a period of one year.
Additionally, the company has inked an agreement to sell the asset of its real estate development firm, Porto Cupecoy, in Sint Maarten to a local client. As per the contract, the company has reserved its right to own Porto Cupecoy’s four condominium units. The company expects to complete the divestiture within a month. Orient-Express expects to receive $45.0 million in cash from the sale of these assets. The company will fund its re-investment program with net proceeds from the sale of the assets.
In a different story, the company declared the completion of the extensive renovation program undertaken for the main building of Copacabana Palace in Rio de Janeiro. It invested nearly $20 million to develop and upgrade Copacabana Palace’s 145 rooms, suites and other areas.
Moreover, the company has also stated its plan to renovate two of its high-valued properties- Grand Hotel Europe in St. Petersburg, Russia and Charleston Place, South Carolina. The Company will fund the refurbishment of Grand Hotel Europe and Charleston Place through a new $50.0 million loan agreement and $9.2 million existing loan facility, respectively. Renovation work is slated to begin in 2013 for both properties.
These divestitures and renovation programs are in line with the company’s philosophy of focusing on its core assets in a bid to improve its portfolio by turning its attention towards more high-valued assets.
Since its inception in 1971, Orient-Express along with its subsidiaries owns, manages and invests in individual luxury restaurants, hotels and resorts, tourist trains, and cruise businesses. The company operates in Europe, North America, and other major international markets.
Orient-Express which competes with the likes of Wyndham Worldwide Corporation ( WYN - Analyst Report ) and Marriott International, Inc. ( MAR - Analyst Report ) , currently retains a Zacks #3 Rank, implying a short-term ‘Hold’ rating on the stock.
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