CDL Hospitality Trusts (CDLHT) is acquiring an upscale lifestyle boutique hotel in Exeter, England, as well as two retail units in the hotel for about £19.4 million (S$33.2 million), its managers announced on Tuesday (Oct 15).
The acquisition is expected to complete once the relevant conditions are met, it said, adding: “The managers are of the view that the acquisition is in the ordinary course of CDLHT’s business.”
In total, Hotel Indigo Exeter’s acquisition is estimated to cost approximately £21.5 million. This comprises the purchase price of £19.4 million and transactions costs such as stamp duty, an acquisition fee, professional due diligence and advisory fees amounting to about £2 million.
This will be fully funded through debt, said the managers.
Post-acquisition, CDLHT’s pro forma gearing as at Jun 30, 2024, will increase from 37.7 per cent to 38.4 per cent.
The acquisition is predicted to be accretive on stabilisation, it said.
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The trust, through an indirect wholly owned subsidiary, has also entered into a franchise agreement with InterContinental Hotels Group (IHG), which will come into effect once the acquisition is completed.
Hotel Indigo Exeter will continue to operate under IHG’s Hotel Indigo brand, said the managers.
Vincent Yeo, chief executive of CDLHT’s managers, said: “Hotel Indigo Exeter is a compelling opportunity to acquire a hotel with top tier design and build specifications, at a significant discount to the current replacement cost.”
According to an independent external valuer, the freehold property is valued at £19.5 million as at Sep 30 – £15.5 million for the hotel component and £4 million for the retail component.
Yeo added that there are areas in the operations that the managers have identified that will potentially drive better performance; there is also a limited new supply of rooms within the city centre for the next few years.
He also noted that the acquisition is a continuation of the managers’ strategy of pursuing accretive acquisitions that augments income streams, while increasing their exposure to the burgeoning lifestyle hotel market.
“We believe our stapled securityholders will benefit from this opportune acquisition, especially at a point when the interest rate cycle is expected to turn,” said Yeo.
Prior to this acquisition, CDLHT’s porfolio comprises 20 properties with a total of 4,820 hotel rooms, 352 build-to-rent apartment units, and a retail mall.
In the United Kingdom, the trust has three hotels and a residential build-to-rent property.
Located in Exeter in the south-west of England, Hotel Indigo Exeter offers 104 rooms, spa and gym facilities, three food and beverage outlets, and two retail units.
It fully opened in October 2023, after undergoing an extensive conversion from a House of Fraser department store.
The existing leases of the two retail units will continue until 2033 on a fixed rent basis with tenant break options in June 2028 and March 2029, respectively, said the managers.
Units of CDLHT closed at S$0.98 on Tuesday, up 0.5 per cent or S$0.005, before the announcement.
