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Room2, the ‘hometel’ brand, has completed the sale and leaseback of its flagship offering, room2 Southampton, to a fund managed by Aberdeen Standard Investments (“ASI”) in a £10m deal.
It said the disposal price reflects a prime net initial yield of 4.98% with a 30-year indexed linked lease in place. The hometel concept, a sub sector of the extended stay space, is the brainchild of brothers Robert and Stuart Godwin, former members of the British Olympic Development Sailing Team.
The transaction marks the first institutional acquisition of a hometel and a further investment for ASI in the fast growing yet undersupplied extended stay sector, which accounts for just 4% of total UK accommodation supply.
James Dunne, head of Transactions at Aberdeen Standard Investments, said: “The room2 platform in the extended stay market has demonstrated its resilience through an unprecedented period of disruption. The ability to pivot between long and short stay augments the lean operational model without compromising on service.
“This not only protects business in a downturn but, as importantly, should allow for future outperformance with the quality facilities and flexibility of the product being attractive to both business and leisure travellers when markets normalise. We are pleased to be joining the room2 journey and look forward to a successful long-term relationship.”
The firm said the hometel model has “proved its resilience during the pandemic”, remaining profitable with both room2 Southampton and room2’s hometel in Hammersmith continuing to trade since the government-imposed lockdown on March 23 last year.
During 2020, room2 achieved a blended monthly occupancy rate of 70%. This compares favourably to the national serviced apartment average occupancy of approximately 47%, which itself is 9% ahead of the national hotel average.
Constructed in 2018, room2 Southampton boasts 71 studio bedrooms each with its own kitchenette, an open plan ‘Living Room’ at ground floor including a café and cocktail bar providing all day dining, along with flexible meeting room and event spaces and a fitness studio.
