Hotels, offices hot items at IBRA sale

Hotels, offices hot items at IBRA sale

SINGAPORE (Bloomberg): Luxury hotels on the resort island of
Bali and prime Jakarta offices were among properties on offer at
a sales presentations organized by the Indonesian Bank
Restructuring Agency.

IBRA, with a portfolio of more than US$7.5 billion of real
estate, held initial talks with more than 30 potential buyers,
including the Government of Singapore Investment Corp., First
Capital Corp., Keppel Land Ltd., all of Singapore.

Some assets attracted more attention than others.

"The hot properties investors are clearly interested in the
prime properties in Jakarta, principally in the central business
district, and hotels on Bali," said Jeffrey K.S. Hong,
international director at Jones Lang LaSalle Inc., a real estate
consultancy, which helped to set up the meetings.

Real estate on offer included office buildings previously
owned by Indonesia's Danamon group, and five-star hotels such as
Hotel Nikko Bali Resort & Spa, the Ritz-Carlton on Bali and
Bintan Beach International Resort, Hong said.

IBRA is selling assets under its control to recoup about one
third of the $86 billion cost of fixing Indonesia's banking
industry following the Asian currency crisis hit in 1997.

"Though people believe that property prices will be the last
to recover (from the economic crisis), IBRA can't wait that
long," said Dasa Sutantio, senior vice president at the bank
agency's asset management investment division.

Real estate makes up 24 percent of the Rp 112 trillion ($14
billion) of assets seized by IBRA from failed Indonesian banks
against debt they owe the government, IBRA officials said. The
agency also controls about Rp 32.5 trillion of real estate-
related loans.

A relative lack of real estate transactions in the Indonesian
market has been a major obstacle as valuation of the properties
becomes a pure guessing game, property analysts said.

"We have to kick-start the process and set a benchmark for the
market," Dasa said.

To lure investors to the table, Dasa said the bank agency
would be flexible and open-minded in putting together
transactions that could protect investors from potential legal
and regulatory problems.

Besides relying on property sales, IBRA's primary source of
revenue this year will come from the initial public share sale of
Bank Central Asia, a transaction that could fetch Rp 3 trillion
to Rp 3.5 trillion.

Other assets tagged for disposal this year include the
largest tire company in Asia, PT Gajah Tunggal, a mosquito coil
group previously under the diversified Salim Group, and PT
Pangansair Utama, a catering company, Dasa said.