CDL HREIT Investments acquires Hotel Brooklyn for $43.8m

The establishment is located in Manchester in the UK. 

M&C REIT Management Limited, as manager of CDL Hospitality Real Estate Investment Trust, announced that CDL HREIT Investments will be entering into a share purchase agreement regarding Hotel Brooklyn.

The current purchase consideration of $5.5m (£3m) is based on the current net asset value of around $41.5m (£22.8m), bank and shareholder’s loan amounts of an estimated $32.7m (£18m), and an estimated negative net working capital of $0.8m (£0.4m).

Also taken into account during pricing was an independent property valuer, Cushman & Wakefield Tie Leung Limited, who pegged the property value at $46.1m (£25.3m), 10.9% higher than the property consideration.

Overall, the total cost of acquisition is an estimated $43.8m (£24.1m), composed of the $41.5m property consideration plus the acquisition fee of $0.4m (£0.2m) and other fees at $1.9m (£1.1m).

The property is currently owned by Roundapple Hotel Partners III Ltd. Upon completion of the acquisition, the company will continue to hold the property. The same owners also hold a long leasehold interest in the property, with the term commencing last 7 May 2021, and expiring on 26 June 2218. 

As the landlord, Rounapple Hotel Partners III currently leases out the whole of the property to HLD (Machester) Limited as the tenant. The lease between the two is set for a 60-year agreement, starting 7 May 2021, and ending on 6 May 2081.

The hotel, which is located in Manchester, United Kingdom, began operations in February 2020. Over 189 rooms make up the establishment, along with two food and beverage outlets and three meeting rooms. A casino, accompanied by a restaurant and bar, also make up the building. 

Based on CDL Hospitality Trusts' estimates, a net property income of $2.59 (£1.7m) was predicted, with the yield sitting at 9.4%.and a DPS accretion of 1.1%.