MONTERREY, Mexico–June 2, 2015–Deutsche Bank Mexico, S.A., Banking institution, Trust Division F/1616 or Fibra Inn (BMV:FINN13) (“Fibra Inn” or “the Company”), a Mexican real estate investment trust specializing in the hotel industry serving the business traveler, announced today the formalization of the acquisition of the Holiday Inn Reynosa Industrial Poniente hotel, located in the state of Tamaulipas and the Hampton Inn by Hilton Hermosillo, located in the state of Sonora.
Holiday Inn Reynosa Industrial Poniente
The acquisition price was Ps. 103.6 million, Ps. 11.0 million was used towards the purchase of an adjoining land lot and Ps. 26.2 million for taxes and acquisition-related expenses. Additionally, Ps. 81.9 million will be invested in a 100-room expansion. The total investment is Ps. 222.7 million and the projected cap rate equals to 10.55%. The payment was made using funds from the CBFI issuance carried out during November 2014.
The hotel currently has 95 rooms, operates in the full-service segment and is operated by Fibra Inn. The annual operating indicators for the hotel during 2014 show 65% occupancy levels, an average daily rate of Ps. 1,010 and RevPar of Ps. 656.5.
The business fundamentals employed by Fibra Inn for the acquisition of this hotel are the following:
- Diversified Industry: The hotel is located in a region with diverse industries, with an important presence of electronic and automotive companies such as LG, Panasonic, Motorola, Nokia, Lear, Delphi, Monroe, TRW, and others. They city of Reynosa has significant activity from the energy sector in Mexico and is part of the Cuenca de Burgos. This market is considered part of the Gulf of Mexico corridor, despite being located in continental territory. Some of the main companies in the energy sector include Weatherford, Halliburton, Dupont, Pemex and Schlumberger, among others.
- Leadership: Fibra Inn also owns the Hampton Inn by Hilton Reynosa Industrial Poniente hotel, located in front of the Holiday Inn Reynosa Industrial Poniente; via which the Company has 2 leading hotels in this location.
- Position: The hotel is positioned as one of the leaders in the area, operating under a global brand, in an area where there are currently 34 hotel offerings, most of which are independently-owned.
- Location: This hotel is strategically located, surrounded by major industrial parks, which generate important demand in this city.
- Synergies: There are significant synergies considered, aimed at lowering operating costs and improving revenue margins, since Fibra Inn owns the two hotels.
- Expansion Potential: The hotel currently has 95 rooms and the land lot purchased allows the possibility of increasing revenues via the construction of 100 additional rooms, thereby further diluting operating costs.
Hampton Inn by Hilton Hermosillo
The acquisition price was Ps. 175.0 million plus Ps. 12.7 million for taxes and acquisition-related expenses. An additional Ps. 27.3 million is destined towards a 56-room expansion, for a total investment of Ps. 215.0 million. The projected stabilized cap rate is equal to 10.2%. The payment was made using funds from the CBFI issuance carried out during November 2014.
The hotel currently has 151 rooms, is in the select-service segment and is operated by Fibra Inn. This property initiated operations six months ago; therefore, its performance indicators are in the stabilization state.
The business fundamentals for the acquisition of this hotel are the following:
- Diversified Industry: The hotel is located in a region with diverse industries, with an important presence of the automotive sector. Companies located in the region include Ford Motors, Delphi, Bosch, Tyco Electronics, Bachoco, Bimbo, Thermadyne, Magna, Lear and BASF. Recently, the mining industry experienced a comeback, with companies such as Grupo Mexico, Cementos Apasco, Cementos Portland, Mineria Pilares, among others. In addition, the U.S. Consulate centralized its visa operations in this location to serve the Northwestern region of Mexico.
- Leadership Potential: The hotel has the potential to become a leader in the region, as it operates under a globally-renowned brand, and is in a market with a hotel offering that includes 34 mostly independent properties.
- Location: The hotel is strategically located, as it is surrounded by the main industrial parks of the city, which generate an important demand.
- Expansion Potential: The hotel currently has 151 rooms and the construction of 56 additional rooms will maximize income and dilute operating costs.
With these acquisitions, Fibra Inn has a portfolio of 33 hotels, plus two hotels under development, with a total of 5,940 rooms; 621 of these are currently under construction.
