Date: October 2018
Location: Central Manchester, UK
Name: The Midland Manchester
No. of Keys: 312
Seller: The seller is an institutional investor – Aprirose, who bought all 26 Q Hotels in September 2017 for £525m. The hotel started life as a “British Rail” hotel, as a cost of £1m! and famously where Charles Rolls and Henry Royce met and formed the eponymous Rolls Royce company. The hotel was once a Crowne Plaza.
Buyer: Pandox AB has entered into an agreement to acquire The Midland Manchester, which is an iconic upper premium hotel in the heart of Manchester in the UK.
The transaction is made with Fattal Hotels Group as operating partner, whereby Pandox, following a legal reorganisation, will retain the property and the hotel operations will be transferred to Fattal.
The total transaction value amounts to approximately £115m, whereof the value of the hotel property amounts to £102m, corresponding to approximately MSEK 1,210.
The acquisition is expected to be financed by a new bank loan and existing credit facilities. The hotel will be operated by Fattal under a revenue-based lease agreement.
The acquisition is expected to be closed during the fourth quarter 2018 and the hotel will be reported under the business segment Property Management. For 2018 the hotel is expected to contribute the equivalent of approximately MSEK 69 in rental income and MSEK 66 in net operating income, on an annualised basis.
“The acquisition of The Midland Manchester is industrially sound and meets all of Pandox’s acquisition criteria. The hotel, which has iconic status in Manchester, is an upper premium, full-service hotel with a very attractive central location and demand from all client segments.
The hotel offers clear potential for increased revenues by upgrading the room product and by increasing the number of rooms. After the acquisition, Pandox will own two hotel properties with strong central locations in a city which is the economic and cultural nexus in one of the fastest growing regions in the UK”, says Anders Nissen, CEO of Pandox.
The acquired hotel property has a yield of approximately 5.7 percent, before transaction costs.
The hotel will be operated by Fattal under a 35-year revenue-based lease agreement where the tenant has a far-reaching responsibility for maintenance, repair and investments in the property.
A joint investment program of £11m, of which Pandox’s share is £6m, for product development of primarily rooms and bathrooms, as well as an upgrade of the hotel’s technical standard, is planned to be carried out starting in 2018.
Besides rooms and suites The Midland Manchester has large public areas including four restaurants and 12 meeting rooms, of which the largest can accommodate 700 persons.
Manchester is the nexus of one of the fastest growing regions in the UK with close to 3 million inhabitants in the greater city area and approximately 7 million inhabitants within a one-hour commute. In 2017, Manchester Airport had approximately 28 million passengers.
Price: £102m (plus £11m refurb commitment)
Price per Key: £326,923
THPT Comment: Great buy…One of Manchester “grand dame” hotels. Pandox and Fattal have a well-oiled partnership relationship that we’re sure works well for both of them. Not a bad price.
First Seen: Pandox website