Redefine to raise its stake in IHL to 50%
REDEFINE International, the FTSE 250 income-focused UK Reit, announced that it has submitted a proposal to International Hotel Properties Limited (IHL) to increase its shareholding in IHL from 17.24 percent to 50 percent.
Redefine said yesterday it intended to acquire 18 343 166 IHL shares from the minority shareholders by way of a scheme of arrangement under the BVI Business Companies Act.
IHL is listed on the Euro MTF market of the Luxembourg Stock Exchange (LuxSE) and on the AltX of the JSE.
Redefine said it would offer 2.5 Redefine International shares for 1 IHL share held for which an additional 45 857 915 new Redefine International shares will be allotted.
It said once the transaction was completed, the listing of IHL’s shares on both the JSE and LuxSE would be terminated.
Redefine chief executive Mike Watters said: “This is an opportunistic acquisition, which increases the company’s ownership in a high-quality and high yielding hotel portfolio to 50 percent and increases our exposure to the strong UK hotel market, while increasing our exposure to RPI-linked leases.”
Redefine said after the transaction was completed, hotels were expected to comprise 19 percent of the company’s gross assets, up from 16 percent at the end of February 2017.
Redefine said the expected addition of IHL was important to its business, as IHL comprised nine good-quality UK hotels valued at £104.35 million (R1.76 billion) to complement its total hotels portfolio.
The group added that four of the hotels, comprising 27.7 percent of the portfolio, were let on long-term leases to Travelodge with an effective average unexpired lease term of more than 20 years.
It said the remaining five hotels, valued at £75.4m, would be managed by the company’s associate, RedefineBDL Hotel Group. Four of the hotels are franchised to Holiday Inn Express and one to Hampton by Hilton.
The group said the five franchised hotels were expected to deliver an effective net initial yield of more than 7.5 percent.
The portfolio is financed at 50 percent loan to value at an all-in cost of debt of 3.32 percent.
It said the proposed transaction also would include the acquisition of 2 410 315 IHL shares from Marc Wainer and his associates, 28 316 IHL shares from Mike Watters, both of whom are directors of Redefine International and a further 1 913 479 IHL shares from Redefine Properties Limited.