Redefine International plc, the FTSE 250 income-focused UK Reit, has raised its stake in International Hotel Properties (IHL) to 74.1% from 58.9%, as it looks to expose itself further to a thriving UK hotel industry.
It bought the additional shares in IHL from Redefine Properties, a major shareholder in Redefine International.
CEO Andrew Konig said Redefine Properties did not want exposure to UK hotels and the group would instead invest more in Polish real estate.
IHL has been delisted. The remaining 25.9% stake in IHL is held by hotel group Tsogo Sun.
Redefine International has no further related investments with Redefine Properties.
The deal will be settled through £7.5m cash and shares.
This will result in Redefine Properties holding 29.62% in Redefine International.
Redefine International CEO Mike Watters said the deal was opportunistic but also strategic.
“This opportunistic acquisition enhances our exposure to nine limited-service UK hotel assets with strong trading records and supports our strategic priority of achieving greater scale through investing in the right earnings enhancing opportunities,” Watters said.
The group’s diversified portfolio “provided it the ability to invest in assets with strong property fundamentals across sectors where we see the best growth prospects. The acquisition is in line with our hotel strategy, which is centred around well located limited service hotels.”
He said that the market outlook for the London hotel sector was positive and the strong brands represented in the portfolio being acquired — including Holiday Inn Express and Hilton — provided a defensive position in any economic downturn.
“Material cost savings will be generated through the delisting of IHL and the integration of the hotel assets into our existing hotel portfolio,” Watters said.