Swedish hotel investor Pandox has purchased the UK and Ireland's Jurys Inn group, with a portfolio comprising 37 hotels businesses, for £800 mln (€910 mln) from private equity player Lone Star.
The acquisition has been made with Fattal Hotels Group as operating partner. Pandox, following a reorganisation of the portfolio, will retain 20 investment properties and one operating property in the UK and Ireland, while Fattal's hotels affiliate Leonardo will acquire the operational platform with 36 hotel businesses under the Jurys Inn brand.
The investment properties will be operated by Leonardo under 25-year revenue-based lease agreements.
'The acquisition fulfils all Pandox’s strategic criteria regarding countries, cities and locations, as well as size, segment and profitability, contributing to a further diversification of our revenue base,' commented Anders Nissen, CEO of Pandox. 'The hotel properties are of high quality, belong to the profitable upper mid-market segment and will bring an immediate and substantial contribution to earnings.
'Through the acquisition, Pandox adds 20 new hotel cities to the portfolio and achieves a considerable market presence in the UK and the Republic of Ireland, which are large and dynamic hotel markets. The acquisition demonstrates Pandox’s ability to execute on its business strategy in international competition and grow with good profitability also in new market,' Nissen added.
The portfolio comprises 21 full-service hotels in the upper-mid market segment with a total of 4,694 rooms and an average size of approximately 224 rooms per property. Thirteen are in England, three in the Republic of Ireland, two in Scotland, one in Wales and one in Northern Ireland.
While the 20 investment properties will be operated by Leonardo under 25-year revenue-based lease agreements, the operating property will be operated by Pandox under the brand Hilton Garden Inn. The hotel has 364 rooms and is located at London Heathrow Airport.
According to the buyer, the acquisition has been fully financed by a new bank loan, existing credit facilities and a loan from Leonardo of £120 mln (€137 mln) to be set-off after the reorganisation, after which Pandox’s share of the total acquisition price will amount to £680 mln (€773 mln).
Pandox said that the hotel property portfolio is expected to contribute the equivalent of approximately SEK 450 mln (€45 mln) in net operating income and SEK 200 mln (€20 mln) in cash earnings in 2018, provided the acquisition is completed before year-end 2017.
'We are proud to continue consolidating and developing our collaboration with Pandox, our strong expansion partner,' said David Fattal, CEO of Fattal Hotels Group. 'For us, the acquisition of Jurys Inn hotels represents a huge step forward in our growth. With this, we have the opportunity to further expand and strengthen our expertise and brand awareness in Europe. We look forward to this new challenge.'
