Redefine International has announced that it has submitted a proposal to International Hotel Properties Limited to increase its shareholding in IHL from 17.24% to 50%. International Hotel Properties is listed on the Euro MTF market of the Luxembourg Stock Exchange and on the AltX of the Johannesburg Stock Exchange (JSE).
Redefine International say that it intends to increase its current shareholding in International Hotel Properties to 50% by acquiring 18,343,166 shares from the minority shareholders by way of a “scheme of arrangement under the BVI Business Companies Act, 2004”. Under this scheme, Redefine International plans to issue 2.5 of its shares in exchange for every International Hotel Properties share held (a total 45,857,915 additional Redefine International shares). On completion of the transaction, the listing of International Hotel Properties ‘s shares on both the JSE and LuxSE would be terminated.
Transaction takes hotels to 19% of redefine International’s gross assets
Following the transaction, Redefine International say that hotels are expected to comprise approximately 19% of its gross assets, up from 16% at 28 February 2017. It says that it is anticipated that material savings will be generated through the integration of the hotel assets into its existing hotel portfolio and REIT status.
International Hotel Properties portfolio comprises nine good quality assets
According to Redefine International, the International Hotel Properties’ portfolio comprises nine good quality UK hotels valued at £104.35 million and which it says complement its existing hotels portfolio.
Four of the hotels, comprising 27.7% of the portfolio, are let on long term leases to Travelodge with an effective average unexpired lease term of over 20 years. The Travelodge portfolio reflects a net initial yield of 5.3% and has five yearly RPI escalations, which Redefine International says provides attractive rental growth prospects in a higher inflationary environment.
The remaining five hotels, valued at £75.4 million, will be managed by the Redefine International’s associate RedefineBDL Hotel Group. Four of the hotels are franchised to Holiday Inn Express and one to Hampton by Hilton. Redefine International says that the five hotels to be managed by RedefineBDL have a strong trading record and provide exposure to the Hampton by Hilton at Gatwick airport which is integrally linked to the airport terminal building and the Holiday Inn Express, Edinburgh which has shown strong growth since acquisition. The five franchised hotels are anticipated to deliver an effective net initial yield of over 7.5%. The portfolio is currently financed at 50.0% loan to value at an all-in cost of debt of 3.32%.
The proposed transaction
Redefine International says that the Proposed Transaction, if it proceeds, will include the acquisition of 2,410,315 IHL shares from Marc Wainer and his associates, 28,316 IHL shares from Mike Watters, both of whom are directors of Redefine International, and the acquisition (post implementation of the Proposed Transaction and outside of the scheme of arrangement) of a further 1,913,479 IHL shares from Redefine Properties Limited, a substantial shareholder of the Company. The acquisition of the IHL shares from these Related Parties will be on the same terms as those for all other minority shareholders.
Redefine International says that it will only proceed with the Proposed Transaction if it is satisfied that it has sufficient support from the minority International Hotel Properties shareholders, is in compliance with Chapter 11 of the UK Listing Rules and has final ratification by the Redefine International Board.
About Redefine International
Redefine International describes itself as an income focused 250 UK Real Estate Investment Trust (UK-REIT) committed to delivering superior distributions to its shareholders throughout the property cycle. It says that its income driven total returns are underpinned by a diversified portfolio, together with an efficient capital structure.
At 28 February 2017, Redefine International’s portfolio was independently valued at £1.5 billion. The company says that the portfolio is focused in Europe’s two strongest economies (the United Kingdom and Germany) and is weighted towards well located properties across a range of sectors, including retail, offices, distribution and hotels, which benefit from strong demand and from which they can capture income and value growth by attracting high calibre occupiers on long leases. The portfolio has a WAULT of 7.5 years with an average debt maturity of 6.8 years (of which over 95% of interest costs are either fixed or capped).
The Company says that its investment philosophy is to effectively allocate recycled capital from mature assets into sectors and locations with strong occupier fundamentals and individual assets with realisable upside.
About International Hotel Properties
International Hotel Properties is a hotel and leisure focused property Investment Company that owns nine hotels in the UK. The Company’s shares are currently listed on the Euro MTF market of the Luxembourg Stock Exchange, which constitutes its primary listing, and on the AltX of the JSE which constitutes its secondary listing.
Redefine International seeks to increase International Hotel Properties stake to 50% : RDI