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Urban&Civic has announced that it has sold the recently completed Hampton by Hilton hotel at Stansted Airport to LGIM Real Assets (Legal & General) for a minimum consideration of £48.3m.
An additional sum of up to £1.1m will be paid to Urban&Civic, depending upon operational performance over the next two years.
The new hotel opened for trading in late July 2017 and is one of only two that are on-terminal at Stansted.
Proceeds of the sale will be directed into the master development of further strategic projects. Shareholders can expect the early announcement of investment in new large-scale projects, which are in line with the company’s strategy to accelerate quality housing delivery in areas of high demand and population growth.
The minimum consideration represents a projected yield on stabilised earnings before interest, tax, depreciation and amortization (EBITDA) three years forward of 6.75%. It is also 15% higher than the European Public Real Estate Association (EPRA) valuation of the completed asset in the interim balance sheet as at 31 March 2017.
Profit realised on actual cost is expected to be in the order of £8.5m. Cash returned back into the business, after accounting for development project bank debt, will exceed £30m.
Nigel Hugill, chief executive, said: “The sale of Stansted represents an obviously strong outcome for the group but the core reason for establishing Urban&Civic was to provide new housing choices and accelerate supply through master development. That involves creating environments in which people actively want to live and a delivery structure that encourages speed and quality from those housebuilders looking to expand output. The model can be seen to be working and is directly consistent with current government policy. We shall be going all out from here.”
Lambert Smith Hampton (LSH) advised Legal & General on this transaction.
Hugh Anderson, from LSH said: “We introduced this opportunity to Legal & General, which we believe represents a prime corporately-branded hotel in an excellent trading location, which offers significant growth potential. This deal is representative of the strength of current demand in the investment market for quality hotel assets.”
