By THE NATION
The company said in a press release that the Tivoli Avenida Liberdade Lisboa, Tivoli Oriente Lisboa and AVANI Avenida Liberdade Lisbon are being sold to Invesco Real Estate, the global real estate investment manager (“Invesco”).
The hotels are being sold for an aggregate gross selling price of EUR 313 million (Bt11 billion) , implying an accretive net disposal EV/EBITDA of approximately 19x and a net gain of EUR 62 million to MINT in 2019.
Following completion of the hotel sales, MINT’s subsidiary NH Hotel Group (“NHH”) will operate the hotels under lease agreements for an initial term of 20 years with options to extend for a total term of up to 60 years.
Subject to customary closing conditions, the sale and leaseback of these properties is expected to be completed during the third quarter. Following the transaction, the hotels will continue to be operated by MINT through NHH under their current brand names.
Strategically, the transactions: (i) increase the internal rate of return of MINT’s 2016 acquisition of the 14-asset Tivoli portfolio to over 20 per cent on an unlevered basis, (ii) pay back nearly the entire capital deployment from MINT’s 2016 Tivoli acquisition through the sale of only three of the 14 acquired Tivoli properties while still retaining over 75 per cent of the total portfolio EBITDA, and (iii) allow MINT to retain continued upside from the hotels through sustainable leases in partnership with a strong institutional investor, while retaining ownership of the Tivoli brand and its Portuguese and Brazilian operating platforms.
Going forward, MINT will continue to maximise value creation for its shareholders. This will be done through selective pursuit of new acquisition opportunities and further initiatives to strengthen its balance sheet by considering strategic asset rotation. In terms of asset initiatives, as a result of MINT’s 94 per cent investment in NHH MINT now has a strong platform to engage with respected hotel real estate institutional investors in Europe and Latin America and deep experience in structuring and operating under long-term sustainable lease structures, opening an important new strategic channel for growth and shareholder returns.
“The completion of the sale and leaseback transaction is a key milestone for MINT, Minor Hotels and NHH,” said Dillip Rajakarier, COO of MINT and CEO of Minor Hotels.
“The transaction underlines our ability to strategically rotate assets in partnership with the right institutional investor, with whom we will share future earnings. Completion of the transaction will strengthen our balance sheet, as we have committed to do, allow MINT to retain significant value and further upside through sustainable long-term leases of the properties under our brands and realize further operational improvement through efficiencies across the NHH Southern European Platform.
“The transaction demonstrates a tangible strategic enhancement of the overall portfolio with MINT’s ability to yield strong returns in developed markets, in addition to our proven track record in emerging markets with secular high growth potential. MINT is fully committed, as ever, to deliver value to our shareholders, whether in the form of operational growth, new acquisition opportunities or asset enhancement and rotation.”