Sat, May 10, 2008 - Page 12 News List

Mega International to sell Sky Tower

HIGH RISE SALE The Kaohsiung landmark, once the nation's tallest building, could be a difficult sell, as the numerous owners of suites in it could make things awkward

By Joyce Huang  /  STAFF REPORTER

Mega International Commercial Bank (兆豐國際商銀), a subsidiary of Mega Financial Holding Co (兆豐金控), plans to auction off part of its collateral — Kaohsiung's 85-story Tuntex Sky Tower (85大樓), or Ocean Star (海洋之星) — in the second half of this year, the bank said yesterday.

“We’re sure to auction off the Splendor Hotel (金典酒店), [located between the 7th and the 79th floors,] in the future,” the bank’s senior executive vice president Lai Chao-hsien (賴昭銑) was quoted as saying by his secretary.

Lai remained in a meeting as of press time yesterday.

The auction of the tower’s remaining floors remains to be discussed, the bank said.

Mega International plans to talk to 17 other syndicate loan creditor banks, which own NT$3.75 billion (US$122 million) in total outstanding debts, for their consents before proposing the deal to its board, the Chinese-language newspaper Commercial Times reported.

The report said that Mega Financial chairman Joseph Lyu (呂桔誠) believes that now is a good time for the company to liquidate the tower building and benefit from recent price hikes in building materials.

Lyu was quoted as saying “steel prices have already risen from NT$7,000 per tonne previously to more than NT$31,000 per tonne,” according to local media reports.

The report also said that the bank’s own appraisal concluded that each of the building’s floors was worth at least NT$100 million and “therefore, may ask for NT$1 billion for the deal.”

The tower, once the nation’s tallest building, was built in 1997, and is now the world’s eighth tallest building, and incorporates the Splendor Hotel, a shopping mall between the second basement floor and the 7th floor and offices.

But Scott Tsai (蔡宸祐), a manager at Kaohsiung-based Ba Ba Real Estate (巴巴建設), yesterday called the deal “mission impossible” since numerous individual owners of small-sized suites inside the building will make it difficult to facilitate the sale of the whole building.

He was nevertheless upbeat about the deal, saying its closing price will depend on whether the new government’s policy of allowing 3,000 Chinese tourists daily is realized.

Should the projected number of Chinese visitors come to fruition, the city’s total of 2,800 hotel rooms, which now have a 71 percent occupancy rate, will be fully occupied which may see a hike in room rates, he said.

“Given future business potential, it should be no problem for the building to close at a price of more than NT$10 billion,” he said, adding that “an even higher price was likely if the bank can convince other owners to sell the building in its entirety.”

He said sales of small suites in the building have seen a 10 percent to 20 percent hike to level between NT$100,000 and NT$200,000 per ping in the past six months.

Should the deal be closed, Mega International may also offer loans to the new buyer as another incentive to attract buyers.

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