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.