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CDL Hospitality Trusts acquires majority stake in Italy hotel for 40.6m euros
CDL Hospitality Trusts (CDLHT) is acquiring a 95 per cent stake in Hotel Cerretani Florence, MGallery by Sofitel for 40.6 million euros (S$63.6 million), its managers announced on Friday.
The purchase consideration works out to 33 million euros, after taking into account a 3.1 million euro payment for its interest in the estimated net working capital and cash of the consolidated FI Dutch HoldCo group, less 10.7 million euros for a bank loan redemption.
FI Dutch HoldCo owns Event Hospitality Group III Italy SRL, which in turns owns NKS Hospitality III SRL - the legal owner of the hotel.
According to the managers, the purchase consideration will initially be funded either through internal resources, or offshore debt or a combination of both.
Independent valuer HVS Global Hospitality Services has valued the property at 43.8 million euros on a 100 per cent basis, or 41.6 million euros on a 95 per cent basis.
Located in Florence's city centre, the freehold property is a four-star hotel with 86 rooms. In 2016, the hotel underwent a 5.3 million euro refurbishment which included a full renovation of all its guest rooms and public areas. For the nine months ended Sept 30, the annualised net property income yield of the property is about 4.6 per cent, the managers said.
They added that the deal represents an accretive acquisition that will strengthen the group's portfolio via diversification.
Said Vincent Yeo, CEO of CDLHT's managers: "The acquisition represents a rare opportunity for CDLHT to penetrate a greatly sought after hospitality market with high barriers to entry. We have also furthered our strategy of capitalising on the window of opportunity afforded by the low funding environment in Europe, while broadening the earnings base of our portfolio."
"With a robust balance sheet and ample debt headroom, we will continue to seek compelling acquisition opportunities," he added.
CDLHT is a stapled group comprising CDL Hospitality Real Estate Investment Trust, and CDL Hospitality Business Trust. The counter closed flat at S$1.49 per unit on Friday, before the release of this announcement.