Redefine to take full control of UK hotel assets

Redefine International is working to take full ownership of a portfolio of seven budget hotels in the UK.

Deputy CEO Stephen Oakenfull told PropertyEU that the UK REIT will use part of the proceeds from a share placement carried out earlier this year to acquire the remaining 40% stake it does not already own in the portfolio.

'We have agreed terms to acquire 100%. We like London budget hotels for their cash generative operations and stable occupancies, but as an asset class they are difficult to access,' Oakenfull noted. The hotel portfolio consists of six London based Holiday Inn-franchised hotels and one Crowne Plaza hotel located in Reading.

Oakenfull said the rest of the proceeds from the €67 mln share issue will largely be used to refinance existing debt facilities due to expire in 2015-2016. 'There is a risk of a change in the interest rate environment in 2015/16 and we believe it is prudent to lock in interest rates now,' he noted.

Looking forward to the rest of 2014, Oakenfull said that the company will focus on divesting smaller, non-strategic assets to focus on higher-quality assets with larger lot sizes. 'We completed the company restructuring last year with the simplification of the business structure and the conversion to REIT status. The focus now is on enhancing the quality of our portfolio through asset management and the sale of certain non-core assets.'

With a market cap of around £650 mln, Redefine International is listed in London and Johannesburg, and counts institutional investors such as AXA, M&G, and Henderson Global Investors among its shareholders. The company has a diversified portfolio of assets in the UK, Germany and Australia valued at £1 bn.

More recently, Redefine has scaled back its investment in Cromwell, an Australian A-REIT, from a shareholding of circa 23% to 13% with a view to placing a greater emphasis on investment in the UK and German markets, Oakenfull added. 'Back in 2008-2009 we supported Cromwell, a listed company in Australia but we expect to recycle this capital back into the UK and Germany in the future.'