CROYDON PARK HOTEL

  • Located in central Croydon.
  • Subject to a 13-year unexpired lease with open market rent reviews.
  • Bought at an attractive initial yield, at a low cyclical point post GFC and was leased to a weak tenant on FRI lease.
  • Croydon was one of the fastest growing local economies in the UK.
  • An important hop-on and hop-off location for leisure visitors to London, given its proximity to both central London and fast connectivity to Gatwick airport.
  • Only credible 4* property in the centre of the town.
  • Branded a Clarion, part of Choice Hotel Group.


INVESTMENT STRATEGY ACHIEVED

  • Vacant Possession of the property was more valuable than its encumbered Investment, therefore if the tenant collapsed it would release capital growth.
  • The initial yield was high relative to other London leased assets, with the potential to grow higher and to generate more immediate growth by converting from the Choice brand to a more established brand with a stronger distribution system.
  • Major interest from global brands/operators.
  • Significant ADR discount to the central London comp. set.
  • Rarity of leased hotels would underpin value and open up interest from institutions.
  • Hold period 5 years, IRR 23.8%.
  • Potential to redevelop part of the site for residential and / or increase room count.
  • Opportunity to reposition the hotel through refurbishment of rooms and public areas.
  • Staple debt secured at attractive coupon, capturing significant positive cashflow for equity.
  • Sold in 5 years.