HDC says stalled city hotel still STO property
At least USD 20 million (MVR 307.2 million) was expected to come from the proceeds from the sale of the hotel.
By
Ahmed Mizyal
Housing Development Corporation (HDC) has revealed that the five-star city hotel being built by STO in Hulhumale still belongs to the company. HDC’s statement came a day after the STO said that the hotel is now owned by HDC.
The hotel which was started by STO in 2011, is yet to be completed and STO’s attempts to sell it have not been successful.
In 2020, the two companies signed an agreement to complete the construction of the hotel. Hussain Amr, managing director of STO, said at its annual general meeting last year that a company had been acquired through HDC to invest and operate the site, but that too did not take place at any particular time.
Later, last week, Amr told an online newspaper that the hotel was no longer under STO. He had said that it was now a property of HDC.
While Atoll Times tried to get a comment from STO on the matter, the company has not been able to share much details at this stage. The HDC, however, denied some of the claims made by Amr.
Ahmed Mimrah, public relations manager at HDC, told Atoll Times that the hotel was still under STO.
"HDC is in the process of acquiring the hotel under a settlement agreement. The ownership of the hotel [to HDC] has not changed yet," he said.
Amr had also said that he had entered into an agreement with HDC. In addition, he said:
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The deal was finalised after HDC hired an investor for STO and sold it
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HDC agreed to return the money invested in the hotel back to STO; the part was being carried out by HDC (that HDC was paying compensation to the STO)
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That STO's assets were still there
However, Mimrah said compensation for STO’s investment in the hotel was still in the process of being negotiated.
"We are still discussing the issue of compensation for investment. There is no consensus in any particular way," he said.
"Since it is a matter under discussion, it is not possible to say at this stage the quantum of compensation to be paid to the STO and the time frame for the payment to be completed."
On January 21, 2021, HDC announced that it was looking for people to develop and operate the hotel. "We are in talks with companies that have shown interest in opening up the offer," Mimrah said. He, however, did not say which companies were involved.
He said that as soon as the ownership of the hotel is completed in a certain manner, work will start and it will be brought into operation.
"The aim is to ensure that the public or company are affected and the project does not come to a standstill," he said.
City Hotel Project
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On July 31, 2007, STO signed an agreement with HDC to acquire land in Hulhumale Phase I to develop a hotel.
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It will be developed on a five-star basis with 250 rooms; it will be run under the Radisson brand of Carlson Group
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US-based Carlson Group signed a management agreement on the hotel on May 14, 2008; but the project slowed down and the deal was scrapped as well
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Construction work began in 2012
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The same year, a USD 32 million loan was taken from Thailand's Exim Bank to complete the project.
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In 2014, the project came to a grinding halt after a government directive.
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Signed an agreement with HDC on July 22, 2020 to develop the hotel.
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On January 26, 2021, it was first announced that it would hire people to buy the hotel through HDC.
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Though a major portion of the project has been completed, STO continues to use it as a warehouse.
Neither of the two companies has disclosed the total amount of money that HDC will have to pay in compensation for the investment made by STO. However, STO’s annual report for 2020 stated that under the agreement between HDC and the company, at least USD 20 million (MVR 307.2 million) would come from the proceeds from the sale of the hotel.
