Redefine International today announced it has agreed to purchase the remaining 40% of the issued shares in BNRI Earls Court Limited to secure full ownership of the Holiday Inn Express Hotel in Earls Court, London.
The £6.3 million (ZAR111.2 million) transaction, which represents a 7.0% net initial yield, is being effected through Redefine International’s 71% held subsidiary Redefine Hotel Holdings Limited (RHH), and implies the value for the 150-bedroom hotel of £28.1 million (ZAR496.0 million).
Mike Watters, Chief Executive of Redefine International explains the hotel forms part of RHH’s existing portfolio of seven hotels. “It is well located, close to the Earls Court Exhibition Centre and Arena and the Olympia Exhibition Centre and has performed extremely well, with underlying operating earnings 15% ahead of the budget for the six months to 28 February 2014.”
Earls Court Holiday Inn Express Hotel is held under freehold title and is subject to a franchise agreement with IHG Hotels Limited until 2023. Supported by its positive performance, RHH completed a 50 bedroom extension to the hotel in November 2012.
The purchase consideration will be funded by part of the proceeds from Redefine International’s recent share placement, together with further co-investment, on a pro rata basis, by the existing co-investors in RHH.
Watters comments, “We are pleased to make the final steps towards deploying the capital from our recent share placement. The limited service hotel sector continues to thrive in pockets of London, and this, combined with our in-depth knowledge of the performance of this particular hotel and our ongoing belief in the potential of this sector, supports our confidence that the transaction will deliver a high quality income to our investors.”
Redefine International is a UK-REIT with a primary listing on the London Stock Exchange and a secondary listing on the Johannesburg Stock Exchange. Redefine International’s geographically diverse investment portfolio is independently valued over £1 billion and comprises real estate assets in the retail, office, industrial and hotel sectors across the UK, Europe – specifically Switzerland, Germany, the Netherlands and the Channel Islands – and Australia. For South African investors it represents a Rand hedge in a stable, sustainable income fund with exposure to real estate in first world markets.
The transaction is conditional on a proposed refinancing of the entire hotel property portfolio being concluded with the existing lender, which is currently in progress.