Swedish hotel investor Pandox has purchased three aparthotels, totaling 503 rooms, in central London for £230 mln (€273 mln), from affiliates of Starwood Capital.
Initially, these hotels are expected to generate annual revenues of approximately £34 mln (€40 mln) and a net operating income of £17 mln (€20 mln), corresponding to a yield of over 7%. Over time, strategic investments can potentially increase the average daily rate and overall yield.
Pandox has utilized its available cash funds to finance this acquisition and secured a new green bank loan, enabled by the properties’ favourable energy rating. This loan is the first of this kind for Pandox, aligning with the company’s existing sustainability-linked loans at the group level. Notably, the interest rate on this new loan is significantly lower than the average interest rate for the overall loan portfolio.
The 315-room Residence Inn by Marriott London Kensington was built in 2009 and renovated in 2018, the 101-room Residence Inn by Marriott London Kensington was built in 2017 and renovated in 2019, while the 87-room Residence Inn by Marriott Tower Bridge was built in 2009 and renovated in 2017. All of them will be managed by Axiom Hospitality.
Liia Nõu, CEO of Pandox, commented: ‘We are happy to have acquired three well-positioned freehold aparthotels in strong locations in central London, thereby increasing our exposure towards the attractive 'extended-stay' segment. The hotels are highly profitable, and the hotel products are well established in the market with strong distribution via Marriott International, which becomes a new cooperation partner to us. The hotel properties are of high technical and environmental standard and contribute positively to the overall quality of our hotel property portfolio. Through the acquisition, we also increase our already strong hotel operating partnership with Axiom Hospitality to a total of eight hotels in the UK.’
As of 30 June 2024, the market value of the hotel property portfolio, including the recent London acquisition is approximately SEK 73.9 bn (€6.5 bn). Of this total, Own Operations and the UK represent approximately 19.8% and 23.3%, respectively. Concurrently, the net loan-to-value ratio increases from approximately 46.2% to 48.4%.
Pandox currently owns three hotels in the greater London area: Leonardo Hotel London Croydon (Leases), Hilton London Heathrow Airport T4 (Leases), and Hilton Garden Inn London Heathrow Airport (Own Operations). Together, these properties have a total of 1,002 rooms.
