JURYS INN Prime Freehold Hotel Investment Opportunity in a Strategically Located UK City - Steerforth Partners
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JURYS INN MIDSUMMER BOULEVARD
MILTON KEYNES, MK9 2HP
Prime Freehold Hotel Investment Opportunity in a Strategically Located UK City
JURYS INN MIDSUMMER BOULEVARD, MILTON KEYNES, MK9 2HP
Executive Summary
• A Prime freehold hotel investment opportunity located in a thriving UK City, only 50
miles North West of London.
• A Modern 279 Bedroom Hotel development opened in August 2006
• One of the largest Branded Hotels in Milton Keynes, situated in the central business area
close to the railway station. The hotel adjoins the HUB leisure complex providing a range
of bars and restaurants.
• A well positioned hotel with consistently high occupancy levels and average room rates.
REVPAR growth is projected to be 2.8% in 2013 and 4% in 2014.
• Let to Jurys Hotel Management (U.K.) Limited, , with a guarantee from Vesway Limited,
on a 35 year FRI lease commencing 25th August 2006.
• A current passing rent of £1,500,891 per annum reflecting £5,380 per room per annum.
There is a further fixed uplift on the 25th August 2014 to £1,626,311 per annum.
• From 25th August 2016 and 5 yearly thereafter the rent will be reviewed on an
upwardly only basis to RPI. There is no collar or cap.
Offers invited in excess of £19,570,000 (Nineteen Million and Five Hundred and Seventy
Thousand Pounds) subject to contract and exclusive of VAT. A purchase at this level rep-
resents an attractive Net Initial Yield of 7.25% after allowing for usual purchasing costs of
5.8%.
Assuming a conservative annual RPI of 2.5% an acquisition at this level would show the following running yield throughout the
unexpired term;
Yield*
25th August 2014 (Fixed Uplift) 7.86%
25th August 2016 (Next Rent review) 8.90%
25th August 2021 10.06%
25th August 2026 11.38%
25th August 2031 12.88%
25th August 2036 14.57%
JURYS INN MIDSUMMER BOULEVARD, MILTON KEYNES, MK9 2HP Location Jurys Inn, Milton Keynes, is located on Midsummer Boulevard, the main business centre of Milton Keynes, close to the railway and bus stations. The city enjoys a central location in the UK with London to the south and Bir- mingham to the north. The city has easy access onto the M1 and A5 whilst the train station has regular direct trains to London Euston (30 mins) and central Birmingham (51 mins). Major London airports including Luton, Stansted and Heathrow, as well as Birmingham airport, are all within 75 minutes drive time. The hotel is located to the south side of Midsummer Boulevard at its junction Jurys Hotel with Witan Gate and adjoins the HUB leisure complex which offers a wide range of bars and restaurants. Situation Milton Keynes is one of Europe’s fastest growing towns benefiting from a strategic central location in the UK. The current population is approximately 250,000 and is on track to become one of the top 15 largest cities in the UK by 2031. The population has increased by over 80% in the last 30 years, against a UK average of just 8%. Milton Keynes was developed as a regional economic centre and has the high- est rate of business start-ups and number of businesses per capita in the UK. The town is home to some major national and international employers with Daimler Chrysler, Argos and The Open University having headquarters in the city. With businesses continuing to locate here, unemployment levels are among the lowest in the country. It also has 4 dedicated conference centres alongside a range of sporting and entertainment venues including the SNOzone at the Xscape complex and the HUB complex which adjoins the Jurys hotel. A new phase of development has just begun which aims to double the size of the city in the next 30 years. This will include a canalside development with bars and restaurants.
Description Accommodation
As a well known national hotel brand, Jury’s Inns seeks to provide guests with high Bedrooms AREA
quality public areas, meeting rooms and food and beverage offerings suitable to both the (per floor)
business and tourist customer. The bedrooms are well equipped and en-suite through-
out, offering good quality inexpensive space. m2 (GIA) ft2 (GIA)
The Milton Keynes hotel opened in August 2006 and comprises a 279 bedroom hotel Ground Floor 1512 16,275
arranged over ground and first to tenth floors. All rooms are en-suite with air First Floor (including business Centre) 1512 16,275
conditioning, flat screen TV’s and free Wi-Fi. Additional facilities include 13 meeting Second Floor 23 1022 11,000
rooms, coffee bar and restaurant & bar. Car parking is available in the nearby NCP. Third to Eight Floor 32 6132 66,004
Ninth to Tenth Floor 32 1906 20,516
Total GIA 279 12,084 130,070
JURYS INN MIDSUMMER BOULEVARD, MILTON KEYNES, MK9 2HP
Tenure Milton Keynes Hotel Market
Freehold There are approximately 32 hotels in Milton Keynes, equivalent to approximately 2,900 bedrooms
and an average size of 91 bedrooms. The budget/limited service hotel sector is well represented
Tenancy with 14 hotels covering approximately 45% of bedroom supply. There is limited further supply
expected in the next few years.
The Hotel is let to Jurys Hotel Management (U.K.) Limited with a guarantee
from Vesway Limited on a full repairing and insuring lease for a term of 35 The Hotel market is predominately business orientated with only limited demand from Leisure
years from 25th August 2006. users. Milton Keynes benefits from a number of firms having their headquarters located there
including Argos, AXA, BP, Mercedes Benz UK and Volkswagen. In addition, Network Rail are
The passing rent on the hotel is £1,500,891 per annum reflecting a rent of occupying a new 400,000 sq ft office building close to the Jurys Inns Hotel which will house 3,000
£5,380 per hotel bedroom per annum. There is a further fixed uplift on the employees.
25th August 2014 to £1,626,311 per annum. From 25th August 2016 and 5
yearly thereafter the rent will be reviewed on an upwardly only basis to RPI. Generally the market experiences strong demand between February and March and between
There is no collar or cap. September and November, underpinned by corporate related demand. Milton Keynes has
benefitted from a significant level of investment in recent years with new developments such as
The Pinnacle and the HUB further enhancing the towns commercial profile.
Despite tough economic conditions, the market has preformed well in the last three years with
occupancy and average room rate up since 2010. During the 12 months to November 2012, aver-
age annual occupancy in the Milton Keynes budget/limited sector experienced a small decline to
73% from 75.9% but room rates continued to increase with a 2.8% rise from an average of £52.13
to £53.59.
The full service hotel market has also performed well in the past year with year on year growth in
both average occupancy and average room rates. In the 12 months to November 2012 average
annual room rate increased by 2% to 73.1%, whilst achieving an average room rate increase of
1.2% to £65.26.
Currently the imminent future supply threat in Milton Keynes is limited with only one develop-
ment of 12 bedrooms expected to open in 2013.
Statistics from Hotsats 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 The overall results for the year show an operating profit of £25 Million compared to £3.1 Million
facilitated by a £290 Million write down by the company’s lenders and an additional investment in 2011. After interest charges of £31.5 Million and tax, the Group recorded a loss of approxi-
of a £120 Million by new investors and existing shareholders. The shareholders of the group now mately £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-
tality Group, one of North Americas largest privately owned specialist Hotel Investors. 31st Dec 2011 31st Dec 2012
Turnover (000’s) 147,481 153,154
This has improved the groups’ net asset position by approximately £290 Million and significantly
reduced the Net Liability position of the group to only £18.9 million. The group continues to EBITDA (000’s) 33,406 34,029
hold significant property assets including the Freehold and Long Leasehold interests in a number Operating Profit (000’s) 3,092 25,010
of their hotels including Kensington, Chelsea and Croydon in London and Glasgow, Manchester Profit/Loss (000’s) (31,680) (6,542)
and 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
confident that this new long term funding will be sufficient to finance the groups operations, The Tenant - Jurys Hotel Management (U.K.) Limited
including its growth plans over the foreseeable future. On the back of this successful financial
restructuring, Jurys Inns are already expanding their offering and are currently undertaking a Jurys Hotel Management (U.K.) Limited reported a loss of £2.8 million in the year to 31st Dec
£25 million refurbishment and renovation of its estate out to 2014. This includes a 150-room 2012 and had net assets at that date of £136.8 Million. Company number 03447849
extension 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 years and will look to open additional hotels across a number of promising markets Year Turnover (£’000s) Net Profit (£000s) Net Assets (£000s)
across the UK. 2012 101,077 (2,809) 136,767
2011 96,073 2,809 142,052
JURYS INN MIDSUMMER BOULEVARD, MILTON KEYNES, MK9 2HP
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 £19,570,000 (Nineteen Million and Five Hundred and Seventy
Projected Occupancy 2013 72.6% Thousand Pounds) subject to contract and exclusive of VAT. A purchase at this level represents
Projected Average Room Rates 2013 £62.52 an attractive Net Initial Yield of 7.25% after allowing for usual purchasing costs of 5.8%.
Projected REVPAR 2013 £45.40
Projected REVPAR Growth 2013 2.8%
Projected REVPAR Growth 2014 4.0%
Rent Cover 2012 (on EBITDAR) 1.8 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 regard-
ing pollution or potential land, air or water contamination. Interested parties are advised to carry out their own investigations if required.
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