MONTERREY, Mexico–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 its decision to exercise its call option to purchase Holiday Inn Reynosa Industrial Poniente hotel in the State of Tamaulipas.
The acquisition price was Ps. 103.6 million and land will be acquired for Ps. 11.0 million. An additional Ps. 81.9 million will be destined for a 100-room expansion and Ps. 26.2 million for taxes and acquisition-related expenses, for a total investment of Ps. 222.7 million. Fibra Inn’s internal management approved the acquisition with a projected stabilized cap rate equal to 10.55%. The payment will be made using funds from the CBFI issuance carried out during November 2014.
The hotel currently has 95 rooms, is in the full-service segment and will be operated by Fibra Inn. The cumulative operating indicators for 2014 reported occupancy of 65%, and average daily rate of Ps. 1,010, and revenue per available room equal to Ps. 656.5.
The business fundamentals for the acquisition of this hotel are the following:
- Diversified Industry: The hotel is located in a region with a diversified industry, with an important presence of the automotive and electronics sector. Companies in the region include LG, Panasonic, Motorola, Nokia, Lear, Delphi, Monroe and TRW, among others. Reynosa is one of the cities with an important presence of the energy sector in Mexico and is located in the Cuenca de Burgos. This market is considered to be a part of the city corridor located in the Gulf of Mexico, although it is on the continental territory. Some of the main companies in the energy sector located in the area include Weatherford, Halliburton, Dupont, Pemex and Schlumberger, among others.
- Leadership: Fibra Inn is also the owner of Hampton Inn by Hilton Reynosa Industrial Poniente hotel, which is located in front of Holiday Inn Reynosa Industrial Poniente hotel. Therefore, Fibra Inn owns the two leading hotels in the city.
- Positioning: The hotel has a leading position in the region, operating under a globally-renowned brand, where the offering includes 34 properties of a majority of independently-owned hotels.
- Location: The hotel is strategically located, as it is surrounded by the main industrial parks of the city, which generate an important demand.
- Synergies: Fibra Inn, as the owner of the two properties, has considered important synergies to reduce operation costs and improve revenue margins.
- Expansion Potential: The hotel current has 95 rooms and the expected land purchase will increase revenues with the construction of 100 additional rooms and further dilute operating costs.
With this acquisition, Fibra Inn has a portfolio of 31 hotels, plus one hotel under agreement, and two under development, with a total of 5,733 rooms; 565 of these are currently under construction.
