Yes it was... real estate in these choice addresses in Mexico City is very expensive... with Mexico being a poor country it is hard for a person who has not been there to realize how expensive it can be... this was a very good price for the buyer.
That is not to say that there was no good reason to sell. I found the most compelling reason being that the hotel's amenities would require an up-grade to meet competition and BEE simply could not afford that plus the added hurdle of the increased competition made it all worst.
And look at the sale of the Paris hotel... timing was awful and losses disproportionate but I guess they where viewed as necessary to improve liquidity...
They are fighting for survival...
for what it is worth
Will Marks, a JMP Securities analyst, is confident Strategic will make a strong comeback.
“I don’t expect the company to go under. They may just have to sell some of their assets,” Marks opined.
Hopefully we will make it to the other side.
HENDERSONVILLE, Tennessee—The luxury segment reported an occupancy increase for the second consecutive week, rising 1.5 percent to 61.4 percent, for the week ending 5 December 2009, according to data from Smith Travel Research.
Look at BBVA will build next door (don't you think it would bring in a few clients) the investment on the builing is 900 million pesos or roughly 70 million on just the building plus the land.
Hard to understand why to sell just for paper profits on what they paid years ago.
The Ritz Carlton was canceled for lack of funding. It would preasure them but they still had the upside of one of the best lots of land ton increase the hotel from 9 floor that it currently has to 40 like the BBVA towers next door or the Torre Mayor in front of them.
They sold it for 6-7 times free cash flow considering it had no debt and sold as such.
Could not have said it better... the too big to fail hotels are kept alive because the lender can't afford the cost of foreclosing and operating them long term until they can be sold.
It is estimated by hotel operators for lenders that it will take three years before they can sell a foreclosed property that is a signature type hotel like the ones BEE owns... sell for for what it is worth that is.
I believe BEE will make it... I think the partnership with the lenders is based on this problem with the notes being too large to foreclose on a whim... so they will be flexible.
But I also think BEE will shrink its balance sheet, take years of dead money to own before it pays off to the investors and those things naturally must weight in a decision of when to buy.
The high interest costs that accompanies even mild inflation will put a lid on new construction...
There's no way they will sell equity at these ridiculously depressed levels. There's no imminent pressure to do so. I do believe they will do an offering at a price north of $3.
I asked them the question of an equity raise at these levels. They responded "absolutely not" at these prices.