JURYS INN CHARLOTTE PLACE - Prime Virtual Freefold Hotel Investment Opportunity in Major UK City
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JURYS INN CHARLOTTE PLACE
SOUTHAMPTON, SO14 0TB
Prime Virtual Freefold Hotel Investment Opportunity in Major UK City
JURYS INN CHARLOTTE PLACE, SOUTHAMPTON, SO14 OTB
Executive Summary
• A Prime Virtual freehold hotel investment opportunity located in a major business and tourism
city on the south coast of England, approximately 80 miles South West of London.
• A Modern 270 Bedroom Hotel development opened in June 2005
• The largest Branded Hotel in Southampton close to the railway station and retail centre.
• Let to Jurys Hotel Management (U.K.) Limited trading as a Jurys Inn on a 35 year FRI lease com-
mencing 8th June 2005, subject to upwardly only RPI reviews five yearly with no cap and collar.
• A current passing rent of £1,557,048 per annum reflecting £5,767 per room per annum.
Offers invited in excess of £18,400,000 (Eighteen Million and Four Hundred Thousand Pounds)
subject to contract and exclusive of VAT. A purchase at this level represents an attractive Net Initial
Yield of 8% after allowing for usual purchasing costs of 5.8%.
Assuming an annual RPI of 2.5% an acquisition at this level would show the following running yield throughout
the unexpired term;
Yield*
8th June 2015 9.05%
8th June 2020 10.24%
8th June 2025 11.58%
8th June 2030 13.10%
8th June 2035 14.82%
JURYS INN CHARLOTTE PLACE, SOUTHAMPTON, SO14 0TB Location Jurys Hotel Jurys Inn, Southampton, is located on Charlotte Place to the north of the city centre at the junction of St Andrews Road (A33) and Brunswick Place. The A33 gives direct access to the M3 and M27 to the North which links the south coast with London. Southampton Central train station is located close by providing direct ser- vices to London Waterloo in approximately 1 Hour and 15 minutes. South- ampton Airport is also one of the fastest growing international airports in the UK and is only 20 minutes away by either train or car. The city’s business centre and main retailing area can be found around Above Bar Street located to the south of the hotel and can be easily reached by foot across East Park. Situation Southampton is one of the largest cities outside of London in the South East and has a population of around 235,000, supplement by a large student pop- ulation of approximately 40,000. Southampton is a strong commercial centre benefiting from two very well respected universities, and specialist industries located at Southampton Sci- ence Park, SETsquared (a collaboration between the universities of South- ampton, Bath, Bristol, and Surrey), and the new Innovation Centre at Ocean Village. As a business centre, Southampton is home to a number of compa- nies with strong foundations in R&D including, SELEX Galileo, ABP Marine Environmental Research Ltd, BMT ARGOSS, British American Tobacco plc together with a host of world class, knowledge-driven companies, such as EADS Astrium, IBM UK, Pall Europe & Siemens. Southampton is also a thriving tourist destination boasting an impressive range of cultural offerings including museums, open spaces, music venues and art galleries alongside a vibrant city with good retail and restaurants. The city is regarded as the cruise capital of Northern Europe and attracts over 1.2 Million passengers per year.
Description
As a well known national hotel brand, Jurys Inns seeks to provide guests with high
quality public areas, meeting rooms and food and beverage offerings suitable to both
the business and tourist customer. The bedrooms are well equipped and en-suite
throughout, offering good quality inexpensive space.
The Southampton hotel opened in June 2005 and comprises a 270 bedroom hotel
arranged over ground and first to twelfth floors. All rooms are en-suite with air con-
ditioning, flat screen TV’s and free Wi-Fi. Additional facilities include 10 meeting
rooms, coffee bar and restaurant & bar. Car parking is available in the nearby NCP.
Accomodation
Bedrooms AREA
m2 (GIA) ft2 (GIA)
Ground Floor 1030 11,086
First Floor (including business Centre) 1030 11,086
Second Floor - Seventh Floor 31 6180 66,516
Eight Floor 22 758 8,159
Ninth Floor 21 758 8,159
Tenth Floor 18 640 6,888
Eleventh Floor 14 529 5,694
Twelfth Floor 9 370 3,982
Plant Room 264 2,841
Total GIA 270 11,549 124,312
JURYS INN CHARLOTTE PLACE, SOUTHAMPTON, SO14 0TB
Tenure Southampton Hotel Market
Virtual Freehold. Granted on a 999 year lease from 17th May 2005 at a peppercorn rent. The Southampton Hotel market experiences strong demand between April and October,
driven by corporate related demand in the early summer and autumn, and leisure-related
Tenancy demand predominately cruise liner related, during the summer months. The city is re-
garded as the cruise capital of Northern Europe and attracts over 1.2 Million passengers
each year. During 2012 cruise passenger numbers increased by approximately ten per cent
The Hotel is let to Jurys Hotel Management (U.K.) Limited with a guarantee from Vesway and similar growth levels are expected in 2013 which generates significant demand for the
Limited on a full repairing and insuring lease for a term of 35 years from 8th June 2005. local hotel market.
The passing rent on the hotel is £1,557,048 per annum reflecting a rent of £5,767 per hotel bedroom There are also a number of strong commercial demand generators for hotels in the city.
per annum. The rent is reviewed every 5 years on an upwardly only basis to RPI with no collar or cap. These include two leading universities, research centres at Southampton Science Park,
SETsquared and a new Innovation Centre at Ocean Village. In addition Southampton of-
The next review is on the 8th June 2015. fers multiple daily ferry crossings to East Cowes and West Cowes on the Isle of White and
is the main commercial centre for a large area of the South Coast including Portsmouth
and Bournemouth.
There are approximately 35 hotels in Southampton providing 2,900 bedrooms and an aver-
age size of 83 bedrooms. The budget/limited service hotel sector is well represented with
12 hotels covering approximately 49% of bedroom supply.
The budget hotel market during the last 12 months to July 2013 has enjoyed a 4.5% in-
crease in average annual occupancy from 74.6% to 79.1%. In addition room rates have
continued to improve with average room rates increasing by 1.7% year on year from £47.58
to £48.36. As a result of these increases in both average annual occupancy and achieved
room rate, RevPAR performance increased by 7.7% from £35.50 to £38.36.
The full service market has preformed relatively well in the last four years with occupancy
levels increasing year on year. In the last 12 months to July 2013 average room occupancy
increased by approximately 3.5% from 72.8% to 76.3% whilst average room rate increased
by 1.8% from £58.85 to £59.90.
*Statistics from HotStats database and STR Global.
Covenant Accounts
Jurys Inns was originated by the Jurys Doyle Hotels Group in 1993 to provide a mid market, Extracts from the 2012 accounts for the Guarantor, Vesway Limited, and the tenant, Jurys Hotel
limited service hotel brand in city centre locations throughout the UK and Ireland. Jurys Inns are Management (U.K.) Limited, are set out below. Both sets of accounts were filed prior to the com-
now recognised as a leading premium budget hotel group and operate 24 hotels across the UK, 7 pletion of the group restructuring and have been hampered by interest charges of approximately
in Ireland and 1 in the Czech Republic. £31.5 million per annum. The restructuring will see a significant reduction in annual interest
charges understood to reflect a reduction in excess of a 60% on 2012 levels
In June 2007 the group, consisting of 21 operating hotels, was sold to a consortium headed by Both sets of accounts can be made available on request.
Quinlan Private for €1.166 Billion who subsequently sold 50% of the shareholding in the parent
company, Vesway Limited, to the Oman Investment Fund in August 2008. Whilst the company The Guarantor - Vesway Limited
continued to enjoy strong operating performance, which has seen profit and revenues grow each
year over the past three years, it had been held back from expanding by its heavy debt burden. 2012 was the third consecutive year of revenue and profit growth for Jurys Inns. Revenues for the
year totalled £153 Million, an increase of 3.8% on 2011, EBITDA before impairment and other
As outlined within the 2012 accounts, the group announced in April 2013 that it had completed operating costs was up 1.9% on the previous year to £34 Million.
a lengthy financial restructuring. The restructuring comprised a substantial write down of the
group’s debt by approximately £410 million to a current debt level of £240 Million. This was fa- The overall results for the year show an operating profit of £25 Million compared to
cilitated by a £290 Million write down by the company’s lenders and an additional investment of £3.1 Million in 2011. After interest charges of £31.5 Million and tax, the Group record-
a £120 Million by new investors and existing shareholders. The shareholders of the group now ed a loss of approximately £6.5 million. Vesway Limited – registered number 440248.
comprises the Oman Investment Fund, Mount Kellet Capital Management LP, a global, multi-
strategy investment fund in partnership with Avestus Capital, Ulster Bank and Westmont Hospi-
31st Dec 2011 31st Dec 2012
tality Group, one of North Americas largest privately owned specialist Hotel Investors.
Turnover (000’s) 147,481 153,154
This has improved the groups’ net asset position by approximately £290 Million and significantly EBITDA (000’s) 33,406 34,029
reduced the Net Liability position of the group to only £18.9 million. The group continues to hold Operating Profit (000’s) 3,092 25,010
significant property assets including the Freehold and Long Leasehold interests in a number of
their hotels including Kensington, Chelsea and Croydon in London and Glasgow, Manchester and Profit/Loss (000’s) (31,680) (6,542)
Birmingham among others in regional UK. Net Asset Value ((000’s) (305,330) (308,934)
The effect of the restructuring substantially strengthens the Group’s balance sheet and Jurys are The Guarantor - Jurys Hotel Management (U.K.) Limited
confident that this new long term funding will be sufficient to finance the groups operations,
including its growth plans over the foreseeable future. On the back of this successful financial Jurys Hotel Management (U.K.) Limited reported a loss of £2.8 million in the year to 31st Dec
restructuring, Jurys Inns are already expanding their offering and are currently undertaking a £25 2012 and had net assets at that date of £136.8 Million. Company number 03447849
million refurbishment and renovation of its estate out to 2014. This includes a 150-room exten-
sion to its Islington hotel in London, which will bring the total number of rooms in the group to
7,681. The group expects to continue a refurbishment program across the portfolio in the next few Year Turnover (£’000s) Net Profit (£000s) Net Assets (£000s)
years and will look to open additional hotels across a number of promising markets across the UK.
2012 101,077 (2,809) 136,767
JURYS INN CHARLOTTE PLACE, SOUTHAMPTON, SO14 0TB
Hotel Performance VAT
Jurys Inn have provided projected growth rates and confirmation of the We understand the sale will be treated as a TOGC.
EBITDAR to rent cover ratio for 2012 as set out in the table below.
Proposal
Additional information on the hotel performance can be made available on request.
Offers invited in excess of £18,400,000 (Eighteen Million and Four Hundred Thousand Pounds)
Projected Occupancy 2013 75.8% subject to contract and exclusive of VAT. A purchase at this level represents an attractive Net
Projected Average Room Rates 2013 £50.73 Initial Yield of 8% after allowing for usual purchasing costs of 5.8%.
Projected REVPAR 2013 £38.45
Projected REVPAR Growth 2013 0.7%
Projected REVPAR Growth 2014 3.6%
Rent Cover 2012 (on EBITDAR) 1.4 times
Robert Millar
Steerforth
4th Floor
3 - 5 Barrett Street
St Christopher’s Place
London, W1U 1AY
Tel: 020 7486 2682
Email: rmillar@steerforthpartners.com
Subject to Contract
MISREPRESENTATION ACT 1967 and PROPERTY MISDESCRIPTIONS ACT 1991
Steerforth (and their joint agents if appointed) for themselves and for vendors or lessors of this property whose agents they are, give notice that: (1) The particulars are produced in good faith, are set out as a general guide only and do not constitute any
part of a contract. (2) No person in the employment of the agent(s) has any authority to make or give any representation or warranty whatever in relation to this property. (3) This property is offered subject to contract and, unless otherwise stated, all
rents are quoted exclusive of VAT. (4) Nothing in these particulars should be deemed to be a statement that the property is in good condition or that any services or facilities are in working order. (5) Unless otherwise stated, no investigations have been
made regarding pollution or potential land, air or water contamination. Interested parties are advised to carry out their own investigations if required.
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