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CDL Hospitality Trusts marked its maiden entry into Europe following of its acquisition of the 198-room Cambridge City Hotel in the UK for £62.5 million (S$135.3 million).
In a release, CDL Hospitality noted that aside from being its first investment in Europe, the acquisition also represents a diversification of its portfolio from the Asia Pacific region.
“The hospitality outlook for UK continues to be strong with international tourist arrivals expected to hit a record 35.1 million in 2015. The recent streamlining of visa process for Chinese visitors entering UK is also likely to encourage more inbound travel from the world’s largest tourism source market,” it said.
Located in the heart of Cambridge city centre, Cambridge City Hotel is 1.6 kilometres from Cambridge railway station and located next to the Grand Arcade Shopping Centre. It is also within the vicinity of popular tourist destinations like Fitzwilliam Museum and King’s College.
It underwent an £8.2 million phased refurbishment of its rooms and public areas from early 2014 until April 2015. Amenities at the hotel include three F&B outlets, five meeting rooms, a gym and 50 parking lots.
Credit Suisse noted that the acquisition price “implies an NPI yield of 5.6 percent (among the lowest in CDL HT’s portfolio), while management plans to fully fund the acquisition with GBP debt via an existing bridge loan facility at 2.8 percent, which will be refinanced to longer-term debt in the future.”
It revealed that CDL Hospitality plans to bring in an international hotel operator within one to two months in order to further improve performance.
“Post-acquisition, we expect the UK to account for around five percent of the NPI, and Singapore will be diluted down to 65 percent (from 67 percent). In the longer term, management targets to raise the yield on the hotel to six to seven percent.”
Maintaining a neutral rating on CDL Hospitality, Credit Suisse expects CDL Hospitality’s gearing to increase to 35.8 percent post-acquisition – or its highest since 2007.
Image: Artist’s impression of an executive king studio unit at Cambridge City Hotel. (Source: CDL Hospitality Trust)
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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