Financial Times

Global Investment IPO, to build Rs 1.6 bln second tower
Global Investment Lanka, the BOI venture that built the Global Towers Hotel Complex on Marine Drive, Colombo 6, plans to go for an IPO and launch the second phase of the project that includes another tower for a luxury apartment hotel and a revolving restaurant at a cost of Rs 1.6 billion.

“For this purpose, the company has already purchased land in an extent of 73 perches next to the existing Global Towers and has finalized the purchase of another 29 perch block adjoining this new land to construct the second Tower on a total extent of 102 perches of land,” said Phylix Selvadurai, the UK-based Sri Lankan property developer.

Eventually, both towers would be amalgamated so that they would appear and operate as a twin-tower hotel with 450 rooms in total. The proposed Global Towers Phase II would be a mixed development with a slightly different concept from that of the existing Global Towers, which is mainly a luxury apartment hotel for investment buyers.

Planning approval has been obtained to construct 14 floors in the new development, a company statement said. This development would include 104 hotel rooms and five floors of common areas with a specialty restaurant, and “first-time-in-Sri-Lanka” revolving restaurant, conference hall, business centre and a rooftop spa, swimming pool and health centre.Global Investment said its maiden project had been an “outstanding” financial success to the shareholders and investors.

The company, on an investment of about Rs 658 million and on project income of about Rs 873 million, was able to make a project profit of Rs 214 million, achieving a profitability of 25 percent on turnover and 33 percent against the investment. It had originally bought the block of land for the existing tower for about Rs 24 million.

Selvadurai entered the local property development market in 1995, having gained experience in the UK in the field of property development for over a period of 30 years.“We had no bank borrowings either locally or overseas as the equity capital that the promoters brought into the country along with the advance payments received on pre-sale of apartments was sufficient for the project to be completed without any financial hardships,” Selvadurai said. “All 56 apartments were pre-sold before the building operation was completed and this assisted the cash inflows to a great extent.”

The company’s management and financial consultant Nivard Cabraal said the rental guarantee of 10 percent offered to investors on the purchase price of apartments enabled the company to lease-back all the apartments for an initial period of three years with an option for further renewal.

“This offer enabled the company to pre-sell the apartments to Sri Lankan expatriates and other foreign nationals without much difficulty, while the ability to take the apartments back on leases enabled the company to commence the Global Towers Apartment Hotel,” the statement quoted Cabraal as saying.

“Even subsequent to the tsunami, the occupancy at Global Towers Apartment Hotel was not adversely affected, and the hotel reached an average occupancy level of 68 percent in the first half of 2005.” The anticipated average occupancy levels in the future are estimated at over 75 percent.

The new complex will include five two-bedroom suites, 60 luxury one-bed room executive suites, and on the top floor six penthouses which would be for “buy to let” investors, providing an opportunity for the buyers to lease back their apartments to the company.

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