SIUT eyes Regent Plaza acquisition to expand healthcare facilities in Karachi

The Sindh Institute of Urology and Transplantation (SIUT) — a non-profit healthcare organisation — is interested in acquiring the building of the Regent Plaza Hotel and Convention Centre.

As per a notice to the Pakistan Stock Exchange (PSX), the SIUT Trust — which operates several hospitals in Sindh — intends to conduct due diligence on the five-star hotel in Karachi, owned by Pakistan Hotels Developers Ltd (PHDL).

The plaza is located on Sharea Faisal on a plot scaling 13,200 square yards, with a total building area of 47,034 square yards. PHDL also owns two other pieces of land in Thatta with a total area of about 14 acres.

According to the latest annual accounts, the main property of PHDL is valued at Rs8.9 billion, with the Regent Plaza building valued at Rs939.2 million.

The hotel comprises 400 rooms with an occupancy rate of 20% for the 2021-22 fiscal year, the latest data available showed. This rate was 9% in the previous year due to COVID-19.

In the first nine months of 2022-23, PHDL reported a net profit of Rs45.5 million, i.e. a 38.3% decrease from the previous year.

The market value of PHDL, based on its share price of Rs255, is Rs4.6 billion.

After the reports of SIUT's interest in buying the hotel, PHDL's share price increased by 7.5%, the maximum allowed in a day.

On Thursday, PHDL's share price was priced at Rs255 per share, with a market capitalisation of Rs4.63 billion. A day earlier, it closed at Rs 251.99, while a month ago on August 28, the company's shares traded at Rs73.

JS Global analyst Waqas Ghani Kukaswadi said that the SIUT Trust may be interested in acquiring the hotel due to its prime location and its structure, which can be easily transformed into a hospital through minor changes.

This represents a 3.4-fold increase, possibly due to rumours of this deal attracting investors to PHDL shares.

Regent Plaza is not currently profitable primarily due to its 20% occupancy rate, attributed to the economic conditions of the country. However, its prime location in an area where recent building sales have ranged from Rs7 billion to Rs9 billion makes it an attractive prospect for SIUT if they can acquire it for Rs4.6 billion, as suggested by Waqas.

A senior official at SIUT told Geo.tv on the condition of anonymity that it is the ideal location for a hospital like SIUT, given the presence of several other healthcare facilities nearby, including The Kidney Centre, Jinnah Postgraduate Medical Centre (JPMC), National Institute of Cardiovascular Diseases (NICVD), National Institute of Child Health (NICH) and numerous private medical laboratories and pharmacies.

Whereas, the current SIUT building is situated in the old city area of Karachi, which is too congested and far away for patients and doctors to easily access.

The SIUT, which goes by the motto of "free with dignity," performs over 1300 dialysis procedures and conducts more than 1800 Out Patient Department (OPD) sessions, both on a daily basis and has carried out over 6800 kidney transplants to date.

The senior official told Geo.tv that SIUT has not received its budget from the provincial government this year so it is speculated that the sought-after property could be donated to the institution, which provides free healthcare.

Another analyst supported this view, suggesting that if PHDL does not donate, other institutions might.

In this country, business conglomerates earn up to 50 billion per year.

"The deal is directly beneficial for the shareholders and indirectly for the Pakistani economy, which is grappling with an economic downturn," said Waqas.

Another recent positive development for investors was ENGRO's tentative agreement with a potential buyer to explore the sale of its thermal energy assets, currently owned by its wholly-owned subsidiary, Engro Energy Limited.

This potential transaction would be structured as a scheme of arrangement.

These deals provide a breath of fresh air for the Pakistani market, which has recently been plagued by bad news, according to Waqas.