The value and risk of investing in a hotel (iii). Asset Assessment and Pricing(A).

This article is about hotel asset valuation and pricing. Speaking of this theme, I believe that many hoteliers will think of the 2017   “Wanrong Rich”  hotel asset acquisition. The deal makes Fuller Real Estate “the world’s largest high-end hotel owner”.  The long-silent Fuli real estate will be a “name”   amazing, this title is enough to value a string of figures.

Once the “South China Five Tigers”, in 2004-2009 the comprehensive strength has been at the top of the list,2007 sales are into the top four real estates. In 2008, Fuli Real Estate began to enter the “commercial real estate”, Fuli Real Estate’s two-pronged approach, the vitality and voice of the local industry are also gradually slowing down. And Fuli real estate from time to time in the hotel industry a little bit of rhetoric, but from time to time can be exchanged for the attention of hotel people.

It seems that the relative silence of the “Tiger of South China”  for nearly a decade is like a tiger asleep. Fortunately, the tiger woke up, tiger teeth are still in, as a “rich and rich cooperation” hotel “golden master”  will let Fuli real estate back into the industry’s line of sight. Personally, I think this is an extremely important step in the diversified industrial layout of Fuli Real Estate, let’s wait and see.

Let’s start with the episode:

Wanda Wang Jianlin’s sentence: “Looking around the world, the opportunity to buy hotels in bulk at this lower price may be the same once in100 years.”  ”

(An alternative interpretation of the gun after Jianjiang ma: “100 years” in the words of Wang Jianlin of Chengwanda.)  It seems that Fu Li is to a hundred years of basic industry not to fall, see the transaction Wang Jianlin cut meat to the heart of the meat. It seems that Wanda in the domestic and foreign two carriages of strategic capital to be carefully laid out. Foreign property wants to take in the domestic financing, the pulse door is to be held first is possible, must first be part of the “some”  have. ）

“This time we got 77 hotels in one breath, and we were the winners for Fuller, ” he said.   ”

(An alternative interpretation of Jinjiang horse cannon: this “breath”  in The Words of Fu Li Silian.)  Yes, out of a big breath, I believe Li Sloan and tension want to roar: “Sleeping tiger has woken up, teeth are still in” . With this sum, Fuller can push another carriage, “Commercial Real   Estate”, onto the fast lane, and quite “return”  is still “The King”  the trend. ）

The history of the enterprise development of Fuli Real Estate believes that we are not very interested here. Then return to our concern about the hotel transaction in the hotel value and the transaction amount is symmetrical, to understand Wanda and Fuli who is the biggest winner of this exchange (this is the content of the hotel sector, do not discuss the integration).

Hotel net asset value is subtracted from hotel depreciation, in the previous period equivalent to the pre-take profit is also included. The net worth of a hotel is pressed to the equivalent of six percent, so it’s no wonder someone throws a cup. Helpless, have the strength to take such a large hotel asset package, and high-star hotel development experience and interest in vigorously developing the hotel industry’s housing enterprises are really not much. The closing price is a real winner for Fuller.

And individual non-hotel industry experts are loud, there is talk of rich real estate to buy losses. Take P/E PE to assess the value of hotels, and even more incredibly single-price hotels, with a net worth of less than $10  billion, and hoteliers laugh. If, according to his algorithm, pee is zero, wouldn’t Wanda have to put up the money to give these 77 hotels together to Fuller Real Estate? Even if PE is negative, the value of the hotel is still there. The previous PE value was positive, and the value of the hotel by its net asset value was already low, not to mention that the PE  values of these experts were outdated.

Including some experts said: “Incorporated into Wanda 77 hotels, may only bring in more revenue for Fuli, but it will not bring in a net profit increase for Fuli.”   It’s also wrong.

Why is pee’s value out of the when did? Including the net asset value of hotels is also outdated. Hotel net asset value is to deduct the cost of hotel financing, hotel entities to pay interest on the indulgence of funds is not the original total amount of interest, but according to the new transaction, price to calculate. The depreciation amount of PE’s value deduction is not divided according to the original total amount of construction, but at the new cost price (transaction price) to divide the beach. Under the new cost algorithm, hotels know that the 77 hotels’ net profit will be raised in the next step.

As of January 2, 2018,   the number of acquisitions of Dalian Wanda Group’s hotel assets by Fuller Real Estate has increased from 77 to 73, and the acquisition cost of Fuller Real Estate has decreased from an initial RMB19,906 million 18.955 billion yuan, a decrease of 951 million yuan. (The latest data can be found on the two major real estate websites

These hotels have basically averaged the promotion period and climbing period, is in the accumulation period stage, the difficult early Wanda has helped to transition, and the hotel’s golden harvest period is just beginning. So who the biggest winner is, the hotel people will understand.

Fuli own a hotel for five years, Fuli real estate’s only lagging hotel sector showed a loss. But please understand that Fuli real estate hotel company sector is still in the initial stage of relative development, or burning money construction period, in the camp hotel also have to pay for the new hotel, of course, also failed to balance the income and expenditure, that is not called a loss, the hotel was not burned? It is only when all the indulgent capital that the hotel is prepared to build begins to be released that the true profit or loss of the hotel is reflected.

In this round of acquisition, Fuli Real Estate’s hotel property stock has been sufficient to solve her current hotel development goals, the follow-up for Fuli Real Estate will be how to focus on how to play the role of indulging in the capital in the hotel. Of course, it is not ruled out that Fuli Real Estate in the next year or two will also be heavily incorporated into more hotel properties.

Value assessment and pricing simply from commercial real estate to assess and price the value of hotels is not appropriate, simply use the single market comparison method, construction costs, and income method to assess, its disadvantages are very large. These three traditional assessment methods should be combined, and the future cash flow generated by the hotel should be valued and discounted according to the hotel’s own characteristics. In addition, the level, number, and volume of high-end hotel guests (or members) of big data is precise drainage for real estate or other businesses, and this big data also requires a reasonable valuation.