CDL Trust Acquires Hotel Brooklyn in Manchester For £24.1m
Main Photo: Hotel Brooklyn
Date: February 2022
Name: Hotel Brooklyn
Location: Manchester, England, UK
Number of Keys: 189
Seller: Roundapple Hotel Partners
Buyer: CDL Hospitality Trust, owned by Kwek Leng Beng
CDL Hospitality Trusts (CDLHT) has announced the acquisition of Hotel Brooklyn located at 57 and 59 Portland Street, Manchester, United Kingdom for £24.1m.
The four-star upscale luxury hotel commenced operations in February 2021 and offers a total of 189 rooms, also offering two food and beverage outlets, three meeting rooms, accommodating up to 140 people, as well as a casino with restaurant and bar. The hotel is within walking distance to the central business district as well as popular tourist attractions.
The purchase, which is subject to post-completion adjustments, amounts to £4.3 million – of which £3 million has been paid to the seller of the property. The remaining £1.3 million has been retained until certain conditions are met. The property is presently held by Roundapple Hotel Partners Limited and upon completion of the acquisition, Roundapple will continue to hold the hotel.
The move allows CDLHT – which owns lifestyle hotels like W Singapore – Sentosa Cove and Studio M Hotel in Singapore – to further penetrate the lifestyle hotel market. Therey expect the acquisition to be accretive based on pro forma estimates. Had the acquisition been completed on Jan 1, 2021, and CDLHT held the property through Dec 31, 2021, the distribution per stapled security (DPS) for CDLHT would have been S$0.0432 instead of S$0.0427. This translates to a DPS accretion of 1.1 per cent.The occupational lease is a “full repairing and insuring lease” that will provide a fixed income stream for CDLHT, subject to upward-only rent review provisions broadly based on inflation.
Post-acquisition, CDLHT’s hotel portfolio fixed rent will rise by 7.8 per cent, assuming the stapled group owned the property from Jan 1, 2022. The hotel has an independent property valuation of £25.3 million as at Dec 31, 2021. This is 10.9 per cent higher than its agreed property value of £22.8 million. The net asset value of Hotel Brooklyn is £4.4 million, taking into account its agreed property value, as well as an £18 million in bank and shareholder loan amounts to be repaid by Roundapple Hotel Partners III at completion
As part of the transaction, a wholly-owned subsidiary of CDL Hospitality Real Estate Investment Trust (CDL H-Reit) on Tuesday (Feb 22) entered into a share and purchase agreement with RAHoldingsUK to acquire Roundapple Hotel Partners III – which holds Hotel Brooklyn. Roundapple Hotel Partners III holds a leasehold interest in Hotel Brooklyn with a remaining lease term of 196 years. It leases out the entire property to HLD (Manchester) – which is part of a group under Marshall Holdings, whose principal activities are in commercial development and construction.
CDL said it acquired the hotel because it offers an “attractive” property yield and accretive acquisition, it also is in line with the strategy of CDL to acquire assets with more “stable income” in order to increase resilience and fixed rental base.
The hotel is managed and marketed by Bespoke Hotels.
Price: £24.1 million
Price per Key: £127,513
THPT Comment: Hotel Brooklyn is in an excellent location at the heart of the second largest economic region in the UK after London. Manchester has well-established corporate, leisure and MICE markets. CDL being the owners of Millennium & Copthorne Hotels, a major hotel player in it’s own right
First Seen: Companies & Markets
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