Hello everyone! Just wondering if any sifus and forumers here have any experience with GRR or hotel profit sharing models in general?
Mind sharing which project u guys invested in before this and whether u guys made money or ended up sueing developer?

Thx!

Hotel business is not guaranteed profitable especially in first two years of operation.

Most if not all grr, rental is included in the inflated spa price. So call rental income is practically from buyers themselves.

Currently getting GRR for Ion Delemen Hotel Project.

So far so good, but hasn't been that long - about a year only, have to wait and see and hope that all continues to go well.

The GRR for Ion Delemen is how many years? What happens after GRR over?

You are at their mercy of whether they want to "renew" or sign a new rental contract with you.

In addition, they can revise the "returns" on the new contract.

The only "guarantee" you have is whatever listed on the initial SPA (normally is like first 2 or 3 years @ x % with options to renew for another 2 years @ y %)

If for whatever reasons they find it's unfavourable to renew, then you get 2 or 3 years of the GRR

My advise would be to look at after "GRR" period and what is your "exit" plan.

That's what I'm asking, what's on the agreement? Is it 2 years? 3 years? Any profit sharing after that?

The GRR is for 3 years.

After which is goes to profit sharing for the following 3 years whereby the split is 70/30 with owners and management.

This will mean that earnings will fluctuate depending on occupancy rates.

After a total of 6 years, it will be up to the developer if they choose to renew and also if we choose to accept.

Talking about Genting. The package as far as I know for Grand Ion Majestic is as below:
- 7% GRR per year for 1st 3 years
- rental paid by quarterly basis after deducted maintenance fee & sinking fund
- 4 months advance maintenance fee and sinking fund deducted 1st quarter year rental
- last 4 months on 3rd year rental will be deducted for unit refurbishment purpose

But this project is sold at an even more expensive pricing (1400psf) than the previous project - Ion Delemen (900psf)

Not sure if after 3 years the profit sharing package is same as delemen

Totally agree. When buying hotel based product one of the most important thing to consider is the exit strategy.
This is especially true when its bought at an inflated pricing.
5 years down the line if planning to exit - Who would buy that product then?
Own stay? Who in their right mind would buy a hotel?
Investors? Why should he buy from you at even higher price and unguaranteed profit.

And not forgetting the hefty maintainence fee. RM0.64psf

For Ion Delemen it is RM0.46psf.

Not too hefty for a studio unit. Also I don't mind paying more so they can maintain the place well. In that Weather up there, things deteriorate fast.

With regard to the exit strategy approach, for this genting project i'm looking long term, not looking to sell after GRR and profit sharing deal ends. I believe if the hotel is making money, i'm sure they will extend the profit share with owners. So just need to hope that the hotel continues to make money.

Also with their Ion Majestic coming up just next door, I am more confident they see more potential there and the need for more rooms. Can check out my post in my signature below - What is the Best Area for Property Investment in Malaysia for 2018?, for my views on Genting.

But.. as with all investments, there's always risk. Have to wait and see. For the time being though, all seems well.

prior to commitment of GRR based property, must really look into the future exit plan.
hotel based property is a no go, as its demand is seasonal and depend very much on the operator success to help you sustain the property.

GRR property is good as owner will get return for the initial years (most uncertain years for demand), as usually a development require initial few years for occupants to fill up units.

should the area have potential for permanent occupants to stay, then that is a good place to invest. for example a place that offer job opportunity (near factory/offices), city centre (short term rental demand), education hub (university / college) subject to its course fees- as you need tenant that can pay you good rental rate, medical centre (hospital) can bring in real demand as workforce require accommodation & patient require short term stay.

i think above info is sufficient for everyone to consider before invest in any GRR property.

one last point, if you have doubt on developer ability to pay during GRR; so you need really careful in selecting a project, even if self-manage by owner it still can bring in tenant, then by all means you can proceed with the purchase.

https://www.facebook.com/129011692114/posts...55711587162115/

GRR.

Genting Malaysia is going to build over 2,000 hotel rooms with a few hotel operators.

Genting is hot.

Hotel operation normally changes hand btw 7 to 10yrs.

A surplus of hotel rooms is expected.

They are preparing for the opening of warners bro theme park rite?

Should be a hit.

2000 units....wet wet water lah....

Afterall genting has the worlds Guinness record of the most rooms hotel operation in the world.

The vision of a man that came to malaya with few ringgits in his pocket.

Haha agreed!

Don't see there being an oversupply there anytime soon.

The man, the myth, the legend - Lim Goh Tong.