Deutsche Bank Mexico, S.A., Institucion de Banca Multiple, Division Fiduciaria, Fideicomiso F/1616 or Fibra Inn (BMV: FINN13), a Mexican real estate investment trust specializing in the hotel industry serving the business traveler, announced that it concluded the acquisition of its first hotel located in Mexico City: the Holiday Inn Mexico Coyoacan hotel, a full service hotel that includes 214 rooms and an adjacent 1,500 m2 lot.
The acquisition was paid in cash using proceeds from the initial public offering that took place on March 13, 2013. The total price paid for the hotel was Ps. 381 million, excluding acquisition expenses.
The acquisition of this hotel has been in review since September, with an original agreed price of Ps. 468 million, excluding expenses, at a cap rate of 9.5%. Given the Fiscal Reform announced in Mexico, Fibra Inn decided to review the hotel’s financial valuation, in order to quantify the impact that the variable revenue component would have under a new fiscal scenario; considering that 43% of the hotel’s revenues correspond to meeting rooms and event rentals and 6% are from food and beverage.
At the conclusion of this analysis, a 19% discount of the original price was agreed upon arriving at a new price of Ps. 381 million. This amount satisfies the Company’s profitability target of a 9.5% cap rate, as previously announced.
Fibra Inn opted to purchase this hotel for the following reasons:
- The depth of the Mexico City market and its surroundings is significant and this is a strategic purchase for the Company’s national position.
- Operational indicators may be improved once the hotel is integrated into Fibra Inn, supported by Fibra Inn’s sales offices in Mexico City and Monterrey; the hotel’s corporate client base will be expanded to strengthen its presence in this market segment thereby growing its existing client base consisting of mainly the government sector.
- The profitability of the investment, at a cap rate of 9.5%, may be even higher, if a future expansion in rooms is made in the contiguous lot included in the transaction.
The Holiday Inn Mexico Coyoacan has high demand for event services with 11 conference rooms, as well as guest rooms that can be converted into event rooms in order to accommodate up to 1,800 people. This hotel will be operated by Fibra Inn’s Hotel Operator. It is located in Calzada de Tlalpan 1507, Colonia Portales, which is 20 minutes from the Mexico City International Airport, 5 minutes from Coyoacan and 15 minutes from downtown Mexico City. During 2012, the occupancy rate was 65%, ADR was Ps. 1,002 and the RevPar was Ps. 652.
With this acquisition, Fibra Inn has 18 hotels in its portfolio, with a total of 3,340 rooms, of which 3,036 are currently in operation.
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