KARACHI: Pakistan Hotels Developers Ltd (PHDL) — which owns Regent Plaza, a multistorey hotel situated at a prime location on Karachi’s main thoroughfare, — told investors on Wednesday a leading non-profit organisation operating in the healthcare segment has offered to buy its property for Rs14.5 billion.

The listed firm also attached the offer letter signed by Syed Shabbar Zaidi, who serves as trustee on behalf of the Sindh Institute of Urology and Transplantation (SIUT) Trust.

The formal offer to buy Regent Plaza on an as-is-where-is basis follows a public disclosure by PHDL on Sept 25 in which the listed firm informed investors the SIUT Trust wanted to conduct due diligence — a comprehensive appraisal of assets and liabilities by a prospective buyer — of its property documents.

Speaking to Dawn, Chase Securities Research Director Yousuf M. Farooq said the apparent reason for the proposed purchase of the hotel’s property by the SIUT Trust is its conversion into a hospital.

He noted the SIUT Trust was acquiring only the property of PHDL, not the company itself. As such, proceeds of this transaction will go to the company, which will still retain its listed status albeit without the main revenue-earning hotel property.

There’s not going to be any tender offer for about 11 per cent stake currently held by minority shareholders given that the transaction doesn’t involve a change in the company’s ownership.

Regent Plaza Hotel and Convention Centre is located on the main Shahrah-i-Faisal on an area of 13,200 square-yards. The total covered area of the multi-storey building is 47,034 square-yards. Two other pieces of real estate owned by PHDL with a collective area of about 14 acres are located in Thatta. It’s unclear if the proposed transaction includes Thatta properties.

The hotel has 400 rooms with an occupancy rate of 19pc for 2022-23. The occupancy rate was 20pc and 9pc in the preceding two financial years.

The latest annual accounts show the company has valued its main real estate at Rs8.9bn. Its hotel building is valued at Rs924.2 million.

In 2022-23, PHDL posted a net profit of Rs44.1m, down 7.7pc from a year ago.

The share of PHDL closed on Wednesday at Rs458.41 after rising 7.5pc, maximum increase allowed in a session. Its stock price has gone up almost 500pc since the end of August. In fact, the “unusual movement” in its price in the days leading up to the first expression of interest by the SIUT Trust resulted in the frontline regulator demanding an explanation from the company.

The SIUT was founded by prominent surgeon Dr Syed Adibul Hasan Rizvi four decades ago as an eight-bed ward in the Burns Unit of Karachi’s Civil Hospital. After undergoing massive expansion over the years, it now operates as a charitable trust and provides medical facilities and financial assistance to over half a million patients every year through multiple hospitals.

Published in Dawn, October 12th, 2023