Jan 30, 2022

Selendiva looking for brokers to sell city buildings

Selendiva Investments Ltd – the Treasury-owned property development firm tasked with turning around under-used State assets–is looking for investment brokers to help find backers for its projects.

The company aims to start the restructuring process for selected assets in the hospitality sector under a ‘special purpose vehicle’ (SPV) called Selendiva Leisure Investments Ltd “by attracting investors and operational experts”, an advertisement states.

To achieve this objective, Selendiva has invited stock-broking firms, investment consultants and investment banks and brokers–collectively referred to as ‘Investment Brokers’–to register to provide professional expertise and to assist “in sourcing investors”.

The brokers are to be paid professional fees (in tiers) on the successful introduction of viable investors: 0.64% up to Rs 100mn and 0.20% above Rs 100mn. The hospitality assets are the Grand Oriental Hotel (GOH) and the York building; the Hilton Sports Centre; and the main Colombo Hilton.

Selendiva also recently called for expressions of interest from investors for the development of GOH and the York building. The main selling points are that the property counts more than 150 years of colonial heritage and has restaurants, rooms and other facilities overlooking the Colombo harbour. The total available floor area is about 220,226 square feet. There is potential to convert the property into a high-end international boutique hotel, Selendiva says.

The company was incorporated pursuant to a Cabinet decision dated March 4, 2020, to transform selected State-owned assets in the hospitality sector “to optimum performance levels through appropriate restructuring”.

It is currently the subject of a fundamental rights petition filed by G Kapila Renuka Perera, Secretary of the Professionals’ National Front of Sri Lanka. He raises concern that the venture will cause irreparable harm to the country’s heritage as some of the buildings vested in Selendiva are historic and architecturally valuable and listed to be preserved in the 1999 City of Colombo Development Plan. A two-judge bench comprising Justices S Thurairaja and A.H.M.D. Nawaz have set the next hearing date for April 7.

As no interim relief has been granted, Selendiva is going ahead with its plans. SPVs are subsidiaries created by a parent company–in this case, Selendiva Investments–with its own assets, liabilities and legal status. Two more SPVs are in the works: one for a real estate cluster and another for the creation of a “heritage square”. All of them will target under-performing State-owned assets.

The other clusters will include the historic General Post Office, the Ministry of Foreign Affairs, Cey-Nor and the Gaffoor buildings in Fort. GOH was recently restored and refurbished at a cost of Rs 269mn. Selendiva is looking to create marketability for it and to expand the remaining area.