Re­de­fine to raise its stake in IHL to 50%

The Star Early Edition - - COMPANIES - Sandile Mchunu

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.

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