Wednesday 27 Sep 2023
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This article first appeared in The Edge Malaysia Weekly on October 24, 2022 - October 30, 2022

London is among the better property markets for investments. The regulations favour landlords and it is a financial centre, which attracts many foreigners seeking places to rent.

But the prospects are sound only for properties in and around London. The same cannot be said for those that are located far from the capital.

Atlan Holdings Bhd seems to have a different view on the UK’s real estate market. Last week, it announced the acquisition of The Cornwall Hotel Spa and Estate for £10.8 million (RM57.5 million).

Atlan’s major shareholder, Datuk Seri Adam Sani Abdullah, has an interest in the company disposing of the Cornwall Hotel Spa, which makes the deal a related party transaction.

The seller’s original cost of investment in 2014 was £5.5 million. The deal now is valued at almost double that amount.

The hotel is located on land covering 43 acres in Cornwall, which is almost a six-hour drive from London. So, it’s not exactly in the vicinity of London.

Atlan will fund the acquisition of the four-star, full-service hotel with 65 guestrooms, through internal funds and borrowings.

The hotel shares the 43 acres with 23 detached lodges that have been sold and another 36 lodges that are to be built. Atlan had stated that other than providing management services to the lodges, it would not benefit from the sale of the 36 lodges.

But all of the common areas around the lodges as well as any vacant land within the property would be owned by the company should the transaction materialise.

Atlan’s core business is managing a chain of duty-free shops located at borders within Malaysia. It also has an automotive business and two buildings in the country.

Even at the worst of times during the pandemic, the cash-rich company declared dividends, which indicates its resilience with its existing portfolio of business.

According to Atlan, the proposed acquisition will diversify its revenue stream and asset base out of Malaysia. Would that really be the case?

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