Colombo Hilton Operates as Usual. Govt Takes Over the Property from the Holding Company over Lease Issue

10th March 2011, www.lankabusinessonline.com

Sri Lanka's Hotel Developers, a listed firm which owns the building on which Colombo Hilton is operated said a land sub-leased from a private party had been taken over by the state.

The state land on which the building was put up has been sub-leased from Cornel and Company, a private firm, in 1984 in return for equity, Hotel Developers said in a filing, responding to an inquiry from Colombo Stock Exchange.

Cornel and Company had leased the land from Sri Lanka's Urban Development Authority (UDA), a state agency. The firm was expected to pay the lease to the UDA.

Hotel Developers said the UDA had repudiated the lease since rentals had not been paid from 1987 and the land had reverted back to the state.

The firm did not say whether it will have to pay rentals to the state or issue fresh stock or if there are any material effect on the company.

The stock closed at 135.80 rupees, up 5.80 Thursday.

Hilton Hotels and Resorts in a separate statement said they will continue to manage the hotel and are expecting to have talks with the state.

The statements came after Sri Lanka's economic development minister told parliament on Wednesday that that the Hilton property had been fully taken back to the state.

Sri Lanka Hilton to hold talks on management deal

Hilton Hotels and Resorts says it will continue to manage Sri Lanka's Colombo Hilton until discussions start with owners following a government move to take over the land on which the hotel is located.

"We have been advised that the Sri Lankan Government has been noted as the new owners of the land and building of the hotel," Hilton Hotels and Resorts said in a statement.

"In due course Hilton representatives will meet with the relevant parties to discuss the change in ownership and in the meantime, Hilton will continue to maintain normal business operations at the hotel."

Hilton said it has a management contract dating back from over 20 years ago with Hotel Developers (Lanka) PLC, a listed firm which owns the building.

On Wednesday economic development minister Basil Rajapaksa was reported to have told parliament that the state had "fully taken over" the property because land lease rentals had not been paid to the government.

Hotel Developers is a majority state controlled firm, which has not filed accounts with the stock exchange for years.

The state-backed project has been embroiled in controversy and litigation with disputes including among promoters and contractors.

CITICORP Sells Rs1bn UDA Debentures to BOC in a Land Mark Deal

25th February 2011, www.news360.lk, By Prasanna C Rodrigo

CITICORP Investment Bank of Singapore has sold Rs. 1 billion out of the Rs. 3 billion worth debentures it purchased from the UDA debenture issue to the Bank of Ceylon.

The transaction which took place on Friday has been conducted via the secondary market.

The DGM, Investment of the Bank of Ceylon P.A. Lionel said the debentures were bought at a yield of 10.80%.

He added “Both parties benefited from this deal”.

When asked why CITICORP sold the debentures, Lionel said “They would have wanted to test the market” Lionel remarked “This is a land mark deal”.

According to him this is the first time that such a big transaction has taken place in the local secondary debenture market.

He was confident that this will send a message to the international investors about Sri Lanka and will help activate the secondary market for debentures here in the country.

“We wanted to show that their debenture investments can be realized at any given time” revealed Lionel.

CITICORP purchased Rs. 3 billion worth of debentures when the Urban Development Authority issued Rs. 10 billion worth of debentures during last year.

Related Info :

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Colombo City Centre to be Developed into a Pedestrian Only Area for Tourist Attraction

05th December 2010, www.thebottomline.lk,, By Indika Sakalasooriya

The historic Colombo City Centre, which had long been a ‘no entry region’ since it was located in a high security zone in the Fort area, is to be developed into a bustling tourist attraction, dotted with restaurants, luxury hotels and other recreational centers, a top government official said.

Defence Secretary and Urban Development Authority Chairman Gotabhaya Rajapaksa said at a recent function that the Colombo Fort area is to be rationalised under the Colombo City Development Prgramme.

“The City Centre will be developed into a ‘pedestrian only area’ and number of restaurants and several luxury hotels are to be built up,” he said.

Rajapaksa also said that a proposal to build a luxury hotel between the momentous Cargills building — which is considered Sri Lanka’s Harrods building — and the colonial Grand Oriental Hotel which is currently undergoing a complete revamp, was also being mooted.

According to sources in the local corporate scene, three companies have already submitted proposals for this project and premier blue chip John Keells Holding and diversified blue chip Hayleys are believed to be among them.

A foreign party with a Sri Lankan collaboration is believed to be the third contender for the project apart from the two local players, of which the details are not yet available.

Earlier Cargills also had expressed plans to develop the landmark Cargills building, the first super market in Sri Lanka, then Ceylon, into a building like Harrods in Central London.

As a part of the Colombo City Centre development project, a number of offices, both private and government sector, are now in the process of shifting.

It is also learnt that Cargills is probably the only privately owned property in the City Centre area and as a result the development process is expected to go smoothly with less resistance.

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Sri Lanka’s Security Forces to Move out of Colombo to Make Way for Colombo City Development. Hotel, Casino, Apartment Complexes Earmarked

Cargills Building in Fort to be Made into a Harrods of Sri Lanka

Sri Lanka’s Security Forces to Move out of Colombo to Make Way for Colombo City Development. Hotel, Casino, Apartment Complexes Earmarked

14th November 2010, www.mediawitty.com

Sri Lanka’s Army, Navy and Air Force offices in Colombo are being moved to a massive 48-acre complex at Akuragoda in Pelawatta, Battaramulla, opposite present Army Volunteer Force Headquarters, making way for Colombo city development programme.

The Urban Development Authority (UDA) has started clearing the area to begin the construction work. According to official sources, the Army, Navy and Air Force headquarters and several of its Colombo establishments will be housed in one area at Akuragoda with preliminary plans already drawn up. Several other administrative offices were also being shifted to the Sri Jayawadenapura, Kotte area.

At present around 500 acres of prime land are occupied by the armed forces with the country’s five star city hotels, banks and commercial buildings clustered in the same area. This area will be cleared for the proposed US$ 500-million tourism zone in Colombo's Beira Lake area with a US $100-million hotel-casino complex.

The Shangri-La group based in Hong Kong is to be given the land housing the present Army Headquarters and military sports ground in Colombo to build a US $75 million luxury hotel and apartment complex. The armed forces occupy prime property in Colombo City and this perhaps was a legacy from British regime when Colombo was a garrison city and at the same time was the principal port and administrative centre, the sources said.

President Mahinda Rajapakse placed the UDA under the command of the Defence Ministry as part of the City of Colombo Development Plan to attract investors and tourists. The plan was initially drawn up in 1999 and re-announced in 2008, but shelved because of the opposition of shanty dwellers, who make up nearly half the city’s population. The government has already launched the Colombo city development programme aimed at making Colombo an International Business Centre and Financial Hub integrated with Tourism and Accommodation Facilities. Measures have been taken by the UDA to clear shanties where 66,000 families live in Colombo’s prime lands in an extent of 450 acres and use such land for other purposes.

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Sri Lanka Aitken Spence Colombo City Hotel on state-run Ceynor Foundation Property

25h October 2010, www.lankabusinessonline.com

Sri Lanka's listed Aitken Spence group has proposed to build a luxury city hotel on excess land owned by a state-run firm in the island's capital Colombo, fisheries minister Rajitha Senaratna said.

The land belongs to Ceynor Foundation, a state-run boat builder. The firm has offices in Colombo's D R Wijewardene Mawatha.

The area had been zoned for leisure and entertainment development by Sri Lanka's Urban Development Authority.

Ceynor chairman Sarath Kumar de Silva said a 15-floor hotel project, which is the maximum allowed under UDA rules was estimated to cost around 30 million US dollars to build.

"But the UDA may relax this rule," he said. If the rule is relaxed a hotel of up to 40 floors could be built, he said.

Senaratne said he hoped to have talks with Aitken Spence on the project which could be in the 'seven star' class.

Aitken Spence is one of Sri Lanka's largest leisure groups, but it has no city hotel. It also operates resorts in the Maldives.

A media report said yesterday that the cabinet of ministers had approved a proposal by the economic development ministry to give land from a military sports ground in Colombo to Hong Kong-based Shangri-La group for a 75 million US dollar hotel and apartment project.

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CITICORP Singapore Buys Entire Allocation for Foreigners in UDA Debentures

05th October 2010, www.news360.lk, By Prasanna C. Rodrigo

CITICORP Investment Bank Singapore limited of Singapore has purchased the entire amount of Rs. 3 billion allocated for foreign investors in the just concluded debenture issue of Sri Lanka’s Urban Development Authority.

Bank of Ceylon the issuer to the debenture said the money came through the local branch of the CITI Bank, which in US$ terms runs up to roughly US$ 27 million.

The Ports Authority, Bank of Ceylon, Sri Lanka Insurance Corporation, the National Insurance Trust Fund, Seylan Bank, Commercial Bank and Sampath Bank are the local parties who invested on this UDA debenture.

UDA raised Rs. 10 billion via this issue and have already announced the basis of allotment of debentures.

Accordingly, The Ports Authority will receive Rs. 1.7 billion worth of debentures; The National Insurance Trust Fund a sum of Rs. 1.045 billion, Bank of Ceylon and the Sri Lanka Insurance each will get Rs. 871 million.

Meanwhile, the 3 other Banks, Seylan, Sampath and the Commercial Bank respectively will receive Rs. 435 million worth of debentures, each.

The UDA debenture will be listed on the main board of the CSE within a period of 2 weeks.

The debenture offered 3 types of investment packages.

A 11% rate will be given to annual payment of interest, a 10% rate will be given to monthly payment of interest and the bi-annual rate will be decided based on the Treasury bill rate + 0.75%.

The salient feature of this debenture is, it is given a Sri Lankan Government’s treasury guarantee.

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Sri Lanka UDA Debenture Issue Closes after Rs11bn Bids

Sri Lanka UDA Debenture Issue Closes after Rs11bn Bids

28th September 2010, www.island.lk

The UDA’s Rs. 5 billion debenture issue to raise funds for the resettlement of 65,000 families living in unauthorised constructions in Colombo was oversubscribed yesterday with managers to the issue state banking giant Bank of Ceylon deciding to close subscription after bids applications amounting to almost Rs. 11 billion were received. The bid was open until subscriptions amounting to Rs. 10 were received.

Bank of Ceylon Chairman Dr. Gamini Wickremasinghe told The Island Financial Review that the issue was closed four days from opening after strong investor demand.

"Thirty percent of the issue was open to foreigners while local investors too showed a lot of interest with many of them coming in at the final stages. We could not accept their applications because by late afternoon we had decided to close the issue," he said.

Dr. Wickremasinghe said that local investors would get a good deal by investing in the five year debentures, as deposit interest rates, already low, could come down further during the months ahead.

Investors had three investment options: the first pays a gross return of 11 percent with interest paid annually, the second option pays a gross return of 10 percent with monthly interest payments while the third option has a floating rate of interest at the Treasury bill rate + 0.75 percent with interest paid bimonthly.

"These five year debentures would be better than fixed deposits and benefit those who rely on monthly interest income," Dr. Wickremasinghe said.

Bank of Ceylon Deputy General Manager P. A. Lionel told The Island Financial Review that applications had amounted to Rs. 9.4 billion last morning (28) after totalling 8.2 billion the previous day (27).

The UDA would use the funds to build housing units for 65,000 families within the next three and half years. The land, freed from this exercise, would be leased out for commercial and development activities.

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Sri Lanka Urban Bond Raises Rs4.6bn at Opening. 30pct of the Rs 10bn Issue Open to Foreign Investors

24th September 2010, www.lankabusinessonline.com

A five-year bond issued by Sri Lanka's Urban Development Authority (UDA), a state agency, to raise 10 billion rupees which opened Thursday has drawn 4.6 billion rupees, a stock exchange filing said.

The UDA is issuing 50 million debentures at 100 rupees each, to be doubled if oversubscribed, to raise cash to resettle squatters occupying prime property in Colombo city owned by government and to free land for private sector commercial development.

The stock exchange filing by state-run Bank of Ceylon, which is managing the issue, said a total of 37 applications for 46,255,900 debentures had been received so far.

The bonds are to be listed on the main board of the Colombo Stock Exchange.

Officials have said 30 percent of the issue is open to foreign investors.

The money raised will be used to build alternative homes for unauthorized dwellers in 800 acres of high value state land in Colombo city.

Investors could chose between three interest options: 11.0 percent annual, 10 percent monthly or a floating rate of Treasury bill plus 75 basis points every six months.

The UDA said it would be able to build around 20,000 houses if 5.0 billion rupees was raised and around 65,000 if 10,000 billion rupees was raised.

P A Lionel, head of investment banking at Bank of Ceylon has said commitments for over 5.0 billion rupees had already been received before the issue opened and they were open to offers for 10 billion rupees.

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Sri Lanka's UDA Debentures Open on Sept 23. 30% of Rs 10bn 5yr Bond Open to Foreign Investors

Sri Lanka's UDA Debentures Open on Sept 23. 30% of Rs 10bn 5yr Bond Open to Foreign Investors

19th September 2010, www.dailynews.lk, By Harshini Perera

The UDA debenture issue will be open to the public on September 23. It will close after 14 days of the opening date.

Depending on the present demand, it is expected to close before 14 days, Bank of Ceylon, Investment Deputy General Manager P A Lionel told Daily News Business. The prospectus for the UDA debenture is available at the Colombo Stock Exchange (CSE) website.

The printed version will be available to the public from September 20.The self-financing UDA debenture issue will be utilised to construct low-income housing schemes for unauthorized dwellers in the Colombo metropolitan city limit.

Under this initiative, a revolving housing project of 65,000 units will be constructed. It will enable the Government to use 800 acres of valuable land for commercial purposes in the Colombo metropolitan area.

These lands are now occupied by unauthorized persons.

Related Info:
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Sri Lanka's UDA Debentures Draws Over Rs 5bn

14th September 2010, www.dailynews.lk, By Harshini Perera

The Urban Development Authority’s (UDA) debenture issue which opened yesterday will be listed in the main board of the Colombo Stock Exchange (CSE). This will be done soon after the debenture issue closure is announced.

This will be a self-financing debenture issue which will be utiised to construct a low-income housing scheme for shanty dwellers in the Colombo metropolitan city limit.

Under this revolving housing project 65,000 units will be constructed and it will enable the Government to use 800 acres of valuable land for commercial purposes in the Colombo metropolitan area. These lands have unauthorized constructions.

There has been over Rs five billion commitment from individuals and institutions so far for the debenture. Bank of Ceylon as the managing body of the debenture needs to distribute it among every party representing society, Bank of Ceylon Investment Deputy General Manager, P.A. Lionel told Daily News Business.

The listing at the CSE will enable investors to liquidise their debenture before five years. It will also improve capital market transactions. “We will not be targeting investors from Colombo but from areas outside Colombo. We have issued applications to the prospectus and once we receive them back, we will allocate debenture shares.

“We have received the CSE approval and the day debenture closes it will be opened for stock market transactions,” Lionel said.

The debenture issue has already received a good response from the public and private sector investors and expects to exceed the limit of Rs five billion, Urban Development Authority Deputy Director General Wasantha Geeganage told Daily News Business.

The debenture is expected to oversubscribe and will increase to Rs ten billion if it is oversubscribed within 14 days. The issue was opened yesterday for Rs five billion and if it reaches the expected Rs 10 billion limit, it will be closed before 14 days.

Depending on the high interest rates it offers and the Government security, Colombo Stock Exchange can expect a high demand for UDA debenture which will be listed in a few days.

There will be many institutional investors involved in the investments, Asia Securities, CEO, Dihan Dedigama told Daily News Business.

Sri Lanka's UDA Launched 5yr Bond to Raise Rs 10bn. 30pct Open to Foreign Investors

10th September 2010, www.lankabusinessonline.com

Sri Lanka's Urban Development Authority (UDA), a state agency, has launched a 5-year bond to raise 10 billion rupees and 30 percent of the issue is open to foreign investors, officials said.

Gotabhaya Rajapaksa, secretary to Sri Lanka's defence ministry, under which the agency operates, said the money would be used to build alternative houses for unauthorized dwellers in 800 acres of high value state land in Colombo city.

Investors could chose between three interest options: 11.0 percent annual, 10 percent monthly or a floating rate of Treasury bill plus 75 basis points every six months, Gamini Wickremasinghe, chairman of state-run Bank of Ceylon which is managing the issue said.

The issue opens for subscriptions Monday. The UDA said it would be able to build around 20,000 houses if 5.0 billion rupees was raised and around 65,000 if 10,000 billion rupees was raised.

P A Lionel, head of investment banking at Bank of Ceylon said commitments for over 5.0 billion rupees had already been received and they were open to offers for 10 billion rupees.

The bonds come with a Treasury guarantee.

Once city property has been released by shifting unauthorized dwellers, the UDA will lease the land to commercial developers. The debt will be serviced with the lease proceeds.

Lionel said foreign investors were among those who have committed to buy bonds. Sri Lanka's central bank has given permission for foreign investors to buy up to 30 percent of the issue or 30 billion rupees.

Up to 10 percent of outstanding government securities are already open to foreign investors and buyers have piled into the high yielding debt.

Sri Lanka Beira Lake Front to be Developed for Hotel, Shopping & Entertainment by UDA with Private Sector

05th September 2010, www.lankabusinessonline.com

Land around a lake in Sri Lanka's capital Colombo has been earmarked for hotels, a park, a shopping and an entertainment area and will be offered to private investors by the island's city development authority, a media report said.

The Sunday Island newspaper quoted Renuka Wickremasinghe, who manages the project at the Sri Lanka's Urban Development Authority (UDA) as saying that 18 hectares of land along one side of Colombo's Beira Lake will be offered for development first.

The land bordering D R Wijewardene Mawatha is owned by the government's Excise Department, Co-operative Wholesale Establishment, a state enterprise, Sri Lanka Ports Authority warehouse.

Private listed C W Mackie and Company, and the Sri Lanka Convention and Exhibition Centre also owns property. The UDA is negotiating with the current owners to release the land and relocate the land, the report said.

The UDA comes under Gotabhaya Rajapaksa, a brother of Sri Lanka's president Mahinda Rajapaksa. The UDA has powers under strict laws to appropriate private land.

The Sunday Island quoted H A Dayananda, the deputy head of projects at the UDA as saying that the agency expected proposals for a 5-star hotel, a shopping mall, restaurants, city hotels multi-stories car park, upmarket housing, a convention centre and cine complexes.

State land would be offered investors as 55 or 99 year leases at 'market value' with 25 percent of the value of assessed land to be paid up front and the balance in three years. Work has start within six months and be complete within three years.

Board of Investment tax concessions will also come with the project, the report said.

Along the shore of the Beira Lake, a 6 to 12 meter wide 'linear park' with a children's play area, water based recreational opportunities, open air entertainment, cultural activities and food outlets would be set up, the report said.

The state has already cleared 1,000 "unauthorized settlements around the area and 320 settlements on a reservation along a railway track" and near a temple on another part of the Lake Shore.

Land belonging to Colombo Commercial Company will also be offered for development, the report quoted Dayananda as saying.

The lake would also be dredged and water would be cleaned, the report said. The lake has blue green algae outbreaks common polluted waterways.

Sri Lanka's UDA to Issue Rs 5bn Debentures to Develop Colombo Land

12th August 2010, www.island.lk, By Zacki Jabbar

Media Minister Keheliya Rambukwalle addressing yesterday’s cabinet press briefing in Colombo said that the cabinet of ministers on a proposal by the Defence Ministry had approved the issue of the debentures by the UDA.

Acccording to a survey conducted, 66,000 low income families were occupying valuable land in Colombo and its environs in a very "haphazard" manner, he said.

Rambukwalle said that the Urban Development Authority has formulated a project proposal to develop valuable lands in Colombo in stages and it has become necessary to relocate unauthorized settlements.

The project, once fully implemented, would especially benefit low income families, he claimed.

Rambukwalle said that the Cabinet also approved another Memorandum by President Mahinda Rajapaksa in his capacity as Highways Minister, to construct a Highway Secretariat at Denzil Kobbekaduwa Mawatha, Battaramulla, with Asian Development Bank assistance.

The entire cost of the project will be Rs. 132 million, he said.

UDA of Sri Lanka Presents Plans and Opportunitie to Investors

06th March 2010, www.dailynews.lk

The Sri Lanka Shippers' Council (an affiliate of the Ceylon Chamber of Commerce) has organized a presentation by Urban Development and Sacred Area Development Ministry that would unveil plans and investment opportunities, on March 18 from 9 a.m at the Ceylon Chamber of Commerce.

The session will be inaugurated by Minister Dinesh Gunawardena.

The Government through the Urban Development and Sacred Area Development Ministry has commenced several development projects; among them are greater Colombo urban township development, Hambantota city, Mankulam and Northern development - 3K and Kerawalapitiya.

These projects will result in many opportunities for investors and businesses in the coming months.

8km Tourism zone in Trinco, Sri Lanka; Bidding for Blocks of Land Begins End of October

18th October 2009, www.nation.lk, By Rohan Abeyawardena

The Tourism Ministry has come up with a massive project prepared by the Urban Development Authority, to meet the severe demand for land to build new hotels in the Trincomalee District due to increasing inflow of tourists, with the ending of the war.

Tourism Ministry Secretary George Michael said yesterday that approximately 500 to 600 acres of state land along an eight-kilometre stretch of the Kuchchaveli coast has been set aside for the new tourism development project in the East.

The plan includes in addition to hotels, public and recreational areas and new access roads. The development of public areas will be undertaken by the Tourism Development Authority, the successor to the Tourist Board, Michael said
Recently the government ordered a halt to haphazard alienation of state land there, which were allegedly taking place with much corruption.

According to the Ministry Secretary, the bidding for the blocks of land between five to 10 acres each would begin as early as end of this month. While the proposals and the conceptual designs will be evaluated by the TDA, the allocation of land to each project will be done by the GA and the Land Commissioner.

Planners have envisaged the construction of 10 rooms per acre on average. There are now moves by the industry to expand in other areas in the East such as Kalkudah and Pasikudah, but according to Michael there are no problems in those two areas as there are plenty of private lands there.

Meanwhile, the clamour of the hotel industry to get a waiver on the no liquor rule on the last Poya Day of the year, which falls on December 31, has been rejected by the authorities. So, all hotels having 31st night celebrations can serve liquor only after midnight with the dawning of the New Year.
The clamour of the hoteliers in Negombo to have a Hikkaduwa type promotional carnival to promote tourism there has got the go ahead and the Ministry Secretary said it would be held before Christmas.

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