New World Development Co. (17), the Hong Kong builder controlled by billionaire Cheng Yu-tung, said it’s considering listing some of its hospitality assets.
The company, with stakes in 16 hotels in Hong Kong, China, and Southeast Asia, hasn’t decided on the timing and assets to be spun off, New World said today in a statement to the Hong Kong stock exchange.
Rising income and the expanding middle class in China are fueling a tourism boom within the region, benefiting hotel operators including Mandarin Oriental International Ltd. (MAND) Hong Kong, where New World owns hotels including the Grand Hyatt and Hyatt Regency, is a favorite destination for Chinese tourists shopping for luxury handbags and jewelery.
“Hotels are getting good valuation because of the booming tourism,” said Adrian Ngan, a Hong Kong-based analyst at Citic Securities Co. “There’re still a lot of details we need to know about this deal, such as which assets would be spun off, and whether they’ll be listed as a company” or a real estate investment trust, he said.
Hotels and restaurants brought in revenue of about HK$3.6 billion ($465 million) in the six months ended Dec. 31, accounting for 11 percent of New World’s sales, according to data compiled by Bloomberg.
New World was the best performer in the nine-member Hang Seng Property Index last year after its share price almost doubled. The stock fell 0.4 percent to HK$14.10 as of 1:14 p.m.
Cheng, 87, last year stepped down as the company’s chairman and was replaced by son Henry Cheng. He’s ranked 36 in the Bloomberg Billionaire Index with an estimated net worth of $19.8 billion
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