Peninsula owner faces $450m loss

Nancy Li and Bloomberg

Hongkong and Shanghai Hotels (0045) expects to record a net loss of about HK$450 million for the first half of the year, from a net profit of HK$94 million a year ago,.

Earnings fell because The Peninsula New York is under renovation, and the new Peninsula hotels in London and Istanbul have not yet stabilized operations, the company said yesterday, adding that its other hotels had "weak markets."

Combined earnings before interest, taxes, depreciation and amortization fell by about 22 percent, after excluding the EBITDA on the sale of The Peninsula Residences London.

Meanwhile, Hong Kong's billionaire landlords are paying agents larger commissions for bringing in office tenants as developers struggle to fill empty commercial space.

Paying commissions worth two to three months of rent is the new norm, up from just one month several years ago, according to real estate agents. Some are receiving as much as four months for landing tenants, they added.

Li Ka-shing's CK Asset (1113) and New World Development (0017) are among landlords paying higher commissions as new office supply hits the market, said one agent. Hongkong Land is another, a different agent said.

In other news, Sun Hung Kai Properties (0016) expects business at its Tai Po Mega Mall to remain stable during the summer vacation from July 19 to September 1. The shopping mall owner has increased promotional expenses by 10 percent to HK$6 million this year.