Stellar Asset Management Limited is delighted to confirm that it has sold The Holiday Inn Express at Leeds Armouries for £8.25 million on behalf of a fund of private investors to Starboard Hotels.
We estimate the net sale proceeds to be approximately equal to £1.85 for every £1 Invested after the repayment of the Fund’s outstanding debt to Natwest.
When combined with the income received on the loan notes and the equity distribution, the total return to investors is over £2.10 or more than double their initial capital since the hotel’s acquisition in August 2013.
The fund was set up in June 2013 and completed the acquisition of the Hotel in August 2013 and since acquisition the revenues and profitability of the hotel have increased substantially. When we bought it, EBITDA was (for the 12 months trailing) £432,000. Using the same measure EBITDA is currently over £770,000.
The hotel is performing well and coupled with a buoyant market where there are a number of active buyers, we believed that there was an opportunity to generate a capital uplift for investors which outweighs the alternative of holding for a few more years, distributing surplus profits and selling into an unknown market. In addition, we were mindful that the hotel will need a refurbishment in the coming years.
Commenting on the sale, Jonathan Gain Chief Executive of Stellar said “The profit for investors generated by this sale is very pleasing and is testament to the hard work of the staff and the management team. In a little over two and a half years we grew profits by EBITDA 80% and investors have reaped the rewards. The hotel was unloved when we acquired it in late 2013 and the performance shows what can be done with a strong focus on revenue generation and cost control.”
The hotel was marketed by Christie & Co and the fund was advised by Nabarro LLP.