Sale and Leaseback Transactions (7464K)
July 20 2011 - 8:58AM
UK Regulatory
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RNS Number : 7464K
MWB Group Holdings PLC
20 July 2011
20 July 2011
MWB Group Holdings Plc ("MWB" or the "Group")
Sales and Leaseback of certain Malmaison properties
MWB is pleased to announce that its 82.5% owned subsidiary, MWB
Malmaison Holdings Ltd ("Malmaison"), has exchanged contracts for
the sales and leaseback of the following four Malmaison hotel
properties: Charterhouse Square (London), Birmingham, Newcastle and
Manchester (together the "Properties"). The total consideration
receivable, in cash, is GBP86.8 million. The consideration reflects
a yield which management considers to be a strong outcome for
shareholders in the current market environment.
In light of the stated intention of the Board to reduce debt
levels, management has concluded that these transactions will be an
advantageous way for the Group to significantly reduce indebtedness
without compromising the operations of the Group. Following the
transactions Malmaison will retain its robust asset backing, with
80% of its 26-stong Malmaison and Hotel du Vin branded hotel
portfolio (by number) being freehold or long leasehold.
The Charterhouse Square property is being sold to and leased
back from funds managed by DEKA Immobilien GmbH whilst the other
three properties are being sold to and leased back from funds
managed by Legal and General Property Limited. Management views the
strength of these institutional counterparties as a significant
endorsement of the Malmaison brand.
The hotel properties will, on completion, be leased back to
Malmaison for a total initial annual rent of GBP6.1 million. There
will no operational impact from the transactions and Malmaison will
continue to operate its highly regarded and award winning brand
from the hotel properties as before the transactions. Malmaison
will enter into effective 70 year lease terms with rent reviews
occurring only every five years, based on compounded indexation
(capped and collared annually between 2% and 4%) and with market
rent reviews to take place at the end of the 35(th) year; terms
which management considers to be highly attractive in the current
environment. Further details of the properties being sold together
with additional information on the sale and leaseback agreements
can be found in the appendix to this announcement.
Given the effective long duration of the leases and the strength
of the underlying operating business, management expect additional
value to be recognised and capitalised in relation to the leases
entered into pursuant to these transactions. This additional
residual value has not yet been determined but management believe
that, when added to the cash consideration for the Properties of
GBP86.8 million, the total will compare favourably with the
aggregate book value of the Properties at 31 December 2010 of
GBP142.4 million.
The transactions are conditional on approval by the shareholders
of MWB, which will be sought by means of the issue of an
explanatory circular and notice of General Meeting, such circular
to be issued in due course.
The proceeds from the transactions will be used to reduce the
indebtedness of Malmaison, which as at 31 December 2010, amounted
to GBP272.1 million. The MWB Board has previously announced that
the reason for extending the Group's accounting reference date to
30 June 2011 was to enable completion of the documentation relating
to the proposed extension of all the Group's banking facilities.
Discussions are ongoing and the Directors are confident of reaching
a satisfactory conclusion. The Group continues to operate within
the terms of the existing facilities.
Richard Balfour-Lynn, Chief Executive, commented:
"I am pleased that we have made great progress along the path
towards achieving more suitable debt levels within both Malmaison
and the Group. We are fortunate to have the confidence of such
strong institutions that recognise the outstanding long term
prospects of our hotel businesses."
Contacts:
MWB Group Holdings Plc 020 7706 2121
Richard Balfour-Lynn,
Chief Executive
Jagtar Singh, Finance
Director
Baron Phillips Associates 020 7920 3161
Baron Phillips
Appendix
The Charterhouse Square property comprises a 97 room hotel. It
comprises gross internal space of 5,063 square metres (54,000
square feet), from which the Group operates the Malmaison London
hotel. The property is being sold to Westinvest Gesellschaft Fur
Investmentfonds MBH, a German company whose assets are managed by
DEKA Immobilien GmbH for GBP31.5 million in cash. Malmaison will
take a 70-year lease on the building with an option to break at the
35(th) year at an initial annual rent of GBP2.1 million with five
yearly index linked rent reviews during the intervening period and
with a market rent review to take place on the 35(th) anniversary
of the term.
The Birmingham Property comprises a 189 room hotel arranged over
7 floors. It comprises gross internal space of 11,377 square metres
(122,460 square feet), from which the Group operates the Malmaison
Birmingham hotel. The property is being sold to Legal and General
Assurance (Pensions Management) Limited for GBP20.3 million in
cash. Malmaison will take a 35 year lease with an option to extend
for a further 35 years on the building at an initial annual rent of
GBP1.5 million, with five yearly index linked rent reviews during
the term and an open market rent review on the 35(th) anniversary
of the term if the option to extend the term is exercised.
The Manchester Property comprises a 167 room hotel arranged over
6 floors. It comprises gross internal space of 8,454 square metres
(91,000 square feet), from which the Group operates the Malmaison
Manchester hotel. The property is being sold to British Overseas
Bank Nominees Limited and WGTC Nominees Limited for GBP20.1 million
in cash. Malmaison will take a 35 year lease with an option to
extend for a further 35 years on the building at an initial annual
rent of GBP1.4 million, with five yearly index linked rent reviews
during the term and an open market rent review on the 35(th)
anniversary of the term if the option to extend the term is
exercised.
The Newcastle Property comprises a 122 room hotel. It comprises
gross internal space of 8,650 square metres (93,110 square feet),
from which the Group operates the Malmaison Newcastle-upon-Tyne
hotel. The property is being sold to BMW (UK) Trustees Limited for
GBP14.9 million in cash. Malmaison will take a 35 year lease with
an option to extend for a further 35 years on the building at an
initial annual rent of GBP1.1 million, with five yearly index
linked rent reviews during the term and an open market rent review
on the 35(th) anniversary of the term if the option to extend the
term is exercised.
The carrying values of the Properties, as at 31 December 2010,
being the date to which MWB's unaudited Second Interim Report and
Accounts were prepared, amounted to GBP142.4 million and on an
individual property by property basis were as follows:
Charterhouse GBP44.5 million
Square
Birmingham GBP34.6 million
Manchester GBP35.9 million
Newcastle GBP27.4 million
This information is provided by RNS
The company news service from the London Stock Exchange
END
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