CDL Hospitality Trusts to buy British hotel for $136m

The upscale Cambridge City Hotel is 1.6km from the Cambridge railway station, and is adjacent to Cambridge's largest mall, the Grand Arcade Shopping Centre.
The upscale Cambridge City Hotel is 1.6km from the Cambridge railway station, and is adjacent to Cambridge's largest mall, the Grand Arcade Shopping Centre.PHOTO: CDL HOSPITALITY TRUSTS

Purchase of Cambridge City Hotel will be the group's first foray into the European market

CDL Hospitality Trusts will purchase a refurbished hotel in Cambridge, Britain, marking its first foray into Europe, said the group of trusts yesterday.

Its CDL HBT Cambridge City (UK) unit has entered a share purchase agreement to indirectly buy Cambridge City Hotel.

This will be done by acquiring 100 per cent of the issued capital of LR (Cambridge).

The sale price of about £62.5 million (S$136 million) is based on the property price of £61.5 million, in addition to a payment of about £1 million - based on the estimated net working capital and cash of LR (Cambridge) at the sale's completion.

LR (Cambridge) will be renamed CDL HBT Cambridge City Hotel (UK) and it will continue to hold and operate the hotel.

The upscale 198-room hotel is 1.6km from the Cambridge railway station.

It is adjacent to Cambridge's largest mall, the Grand Arcade Shopping Centre, and near popular tourists spots such as King's College and Fitzwilliam Museum.

The hotel completed an £8.2 million refurbishment in April that refreshed the public areas and all the hotel's rooms.

Mr Vincent Yeo, chief executive of the trusts' managers, said in a statement: "This acquisition in Cambridge is in line with our strategy to invest in markets with good growth potential."

He noted that Cambridge has been one of the strongest-performing hospitality markets in Britain, "and the burgeoning life science cluster will support the growth trajectory of the market".

The acquisition is a "rare opportunity... to acquire a prime asset in a tightly held investment market", added Mr Yeo.

The acquisition will be fully funded initially by pound-denominated debt. Once it is completed, the trusts' gearing will increase from 32 per cent to 35.8 per cent.

The group added that the investment "represents a diversification of its portfolio from the Asia-Pacific region".

It noted that Britain's hospitality outlook continues to be strong, and it cited international tourist arrivals are expected to hit a record 35.1 million this year.

"The recent streamlining of visa process for Chinese visitors entering Britain is also likely to encourage more inbound travel from the world's largest tourism source market," added the group.

Mr Yeo said this latest acquisition is an opportunity to "augment our portfolio and income, as well as to diversify our earnings base".

He added: "We believe our unitholders will benefit from the exposure to the robust and growing Cambridge hospitality market."

A version of this article appeared in the print edition of The Straits Times on September 10, 2015, with the headline 'CDL Hospitality Trusts to buy British hotel for $136m'. Print Edition | Subscribe