AXA Real Estate acquires the IBIS London City Hotel for £38 million on behalf of CIS (UK)

AXA Real Estate Investment Managers announces that it has completed the acquisition of the IBIS London City Hotel for £38.35 million (approx. €43.7 million), on behalf of the Co-operative Insurance Society (CIS) from Mangrove Securities Ltd. Providing a total of 348 rooms, arranged over 10 floors, with a 150 cover restaurant and bar, the IBIS London City Hotel is situated in a prime location on 5 Commercial Street in the City of London.


The hotel is operated by leading hotel group, Accor.

Conveniently positioned for both business travelers and tourists, it is within walking distance from three underground stations, as well as Liverpool Street, the City's largest mainline station. It is anticipated to profit from the increased number of visitors expected for the upcoming 2012 Olympics, particularly given its location on the Eastern fringes of the City and its connections to the Olympic Site in Stratford.

The hotel is operated by leading hotel group, Accor, which already operates 70 of the hotels within AXA Real Estate's managed portfolio, further expanding the relationship between them. The current rent for this hotel is £2.6 million per annum (£7,600 per room per annum), with a total of 19 years left on the FRI (Fully Repairing and Insuring) lease to Accor UK Economy Hotels Ltd.

The hotel trades under the IBIS brand, as a 'contemporary economy London hotel', which is the European leader and fourth globally within this market. With a well secured tenant and the opportunity to benefit from rental increases linked in part to turnover, income from this acquisition is expected to grow in line with an increasingly profitable economy hotel market.

MBH LLP acted for CIS and DE& J Levy LLP acted for the vendor.

Commenting on the acquisition, Huw Stephens, Head of UK Transactions at AXA Real Estate, said: "This acquisition further demonstrates AXA Real Estate's ability to source deals that are specifically tailored to clients' investment requirements. This is made possible through our specialist local teams who have a specific understanding of value drivers in each real estate sector."

Gael Le Lay, Head of Hotel Investment at AXA Real Estate, said: "The hotel offers a visible and long term income stream with growth potential, given that we continue to see increased profitability in the economy hotel market. It strengthens our belief that, as an asset class, the hotel sector fits well with our clients' current investment strategies. The acquisition of this latest asset takes our portfolio of European hotels close to 100."

Source: FTI Consulting

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