London – room2, the world’s first hometel brand, has completed the sale and leaseback of its flagship offering, room2 Southampton, to a fund managed by Aberdeen Standard Investments. The disposal price of c. €11.2m (£10m) reflects a prime net initial yield of 4.98% with a 30 year indexed linked lease in place. The hometel concept, a sub-sector of the extended-stay space, is the brainchild of brothers Robert and Stuart Godwin, former members of the British Olympic Development Sailing Team.
Constructed in 2018, room2 Southampton boasts 71 studio bedrooms each with its own kitchenette, an open plan ‘Living Room’ at ground floor including a café and cocktail bar providing all-day dining, along with flexible meeting room and event spaces and a fitness studio. It occupies a prominent position in central Southampton, with spectacular views over Queens Park and the harbour.
James Dunne, Head of Transactions at Aberdeen Standard Investments, commented: “The room2 platform in the extended-stay market has demonstrated its resilience through an unprecedented period of disruption. The ability to pivot between long and short stay augments the lean operational model without compromising on service. This not only protects the business in a downturn but, as importantly, should allow for future outperformance with the quality facilities and flexibility of the product being attractive to both business and leisure travellers when markets normalise. We are pleased to be joining the room2 journey and look forward to a successful long-term relationship.”
Robert Godwin, Managing Director at Lamington Group and room2, commented: “The sale and leaseback of room2 Southampton was instructed to test the room2 and Lamington Group covenant strength in the market. Agreeing this transaction with ASI allows us to take the step to institutional-grade where the strengths of the brand, model, positioning and real-estate backed covenant are fully valued. Furthermore, completing it during Covid-19 demonstrates the long-term belief that ASI has in room2 hometels, proving the durability of the model against this challenging economic backdrop. The sub 5% yield helps to underpin development values for the opportunities we are appraising with our future partners and gives confidence that room2's strategic positioning is aligned with the future, whilst further indicating that we are out to do business. We hope this partnership will lead to further investment into more room2’s in the near future. The proceeds of the disposal are earmarked for reinvestment into acquisition opportunities as we remain on track to deliver 5,000 keys by 2030.”