Redefine International, the diversified income focused property company, announces that it has through its 71% held subsidiary Redefine Hotel Holdings Limited (RHH) completed the acquisition of 60% of the issued shares in BNRI Earls Court Limited (BNRI) from Camden Lock and Earls Court LLP for a consideration of £8.7 million (approx. €10.8 million). BNRI owns the 150 bedroom Holiday Inn Express Hotel in Earls Court, London valued at £27.0 million (approx. €33.5 million).
The Hotel formed part of the Splendid Hotel Portfolio comprising seven hotels that were originally co-owned by Bashir Nathoo, five of which were acquired by the Group in December 2010. Redefine International Hotels Limited has been involved in the operational management of the Hotel since December 2010 and therefore has a good working knowledge of the business prior to the Group's investment.
The Hotel is well located, close to the Earls Court Exhibition Centre and Arena and the Olympia Exhibition Centre. It is held under freehold title and is subject to a franchise agreement with IHG Hotels Limited until 2023. There are two meeting rooms for up to 50 delegates, a restaurant/bar and 16 car parking spaces. The Hotel is in excellent condition and has been well maintained.
The Earls Court and Olympia Exhibition Centre area has been earmarked for a large-scale redevelopment, including several thousand new homes and a potential new International Convention Centre. This process is expected to take several years and is likely to boost the occupancy of the Hotel during the development phase. The Hotel will complement the Group's existing portfolio of six high quality hotels.
The Hotel is partly funded by a debt facility of £12.5 million (approx. €15.5 million) from Aareal Bank AG for a term expiring in November 2015, at an all-in rate of 5.19%. The remaining 40% shareholding in BNRI is held by the Seller, which is controlled by Bashir Nathoo.
The consideration of £8.7 million (approx. €10.8 million) for the 60% shareholding in BNRI plus acquisition costs of £0.4 million (approx. €0.49 million) were funded by RHH utilising part of the proceeds from the Company's recent capital raise, together with further co-investment, on a pro rata basis, by the existing co-investors in RHH. The investment reflects a net initial yield of 7.5%.
Commenting, Mike Watters, said: "During our recent £127.5 million capital raise we stated that we had identified a strong pipeline of acquisition opportunities, and this transaction represents the first of these. The limited service hotel sector continues to thrive in pockets of London and, together with our in-depth knowledge of the performance of this particular hotel and our belief in the potential of this sector, we believe this transaction illustrates a compelling investment opportunity which will deliver a high quality income to our investors."
Source: Redefine International