Johannesburg - International Hotel Properties (IHL), the European-focused hotel and leisure property company, is targeting further hotel acquisitions in the UK and plans to expand its operations on mainland Europe in the medium term.
Jon Colley, the chief executive of IHL, stressed yesterday that the group’s acquisitions would be driven by opportunities in the market.
However, he confirmed the target in the group’s prelisting statement was for it to have a £500 million (R9 billion) portfolio by 2019 and its current portfolio was valued at £86m.
IHL has a primary listing on the Euro MTF market of the Luxembourg Stock Exchange and a secondary listing on the JSE’s AltX.
IHL owned eight hotels at its year-end in August, three of which were acquired in November last year, one in March and two in April with the Travelodge Belvedere development completed in April.
The group has raised a total of £52.3m through multiple placements since October last year and had an overall loan to value of 40 percent at end-August , which was lower than its targeted loan to value ratio of between 50 percent and 55 percent.
Colley said the group’s market activity would determine if it had to raise further funds in the next year.
“We are clearly opportunistically driven and if see something that hits the right return, then yes, we will do further placements,” he said.
Colley said the three investment hotels acquired during the year together with the newly developed hotel were all leased to Travelodge, the UK’s second largest budget hotel chain with 534 hotels and almost 40 000 bedrooms.
“Significant milestones have been reached this year in establishing a well-positioned and focused hotel property investment group that delivers strong value to our shareholders,” he said.
“Over the past year, our hotel portfolio has generated good returns and we continue to assess hotel acquisitions which offer the right yield. We have identified further asset-enhancing opportunities through the creation of additional room stock and a programme of capital expenditure improvements.”
Colley said there was the ability to add rooms to two hotels acquired during the year, including six extra rooms at the Holiday Inn Express Southampton, which would come on line next year.
He added that hotels historically were more resilient than other asset classes over the longer term and like all periods of change and uncertainty, Brexit presented both risks and opportunities for IHL.
“Our assets are in good condition and our strong brands offer a defensive strategy in the face of any downturn in the economy. New acquisitions are being sought in mainland Europe, which will spread the geographic distribution and associated risk of only operating in one market,” he said.
Colley said a date had not been specifically set for any acquisitions in Europe.
IHL announced yesterday a maiden full-year dividend of 5.5p for the year to August.
Revenue for the year totalled £9.5m, of which partial year trading hotel revenues from the four acquired hotels contributed £8.4m. Rental income increased by £1m to £1.1m because of the acquisition of the three Travelodge hotels and the completion of the Belvedere development.
Revenue per available room for the portfolio of four trading hotels increased by 12.6 percent year on year £61.10.
Colley said IHL’s hotels were trading at 84.1 percent occupancy and outperforming the local market by 8.9 percent.
Shares in IHL were unchanged on the JSE yesterday to close at R20.