30th Dec 2015 12:18
LONDON (Alliance News) - Action Hotels PLC on Wednesday said it has agreed a joint venture with Action Group Holdings to acquire a leasehold interest in a building in Ras Al Khaimah in the UAE from Action Real Estate Co.
Action Hotels, which owns three and four-star hotels in the Middle East and Australia, plans to convert the building into a hotel and will acquire it on a joint freehold basis with Action Group Holdings, its majority shareholder. Action Real Estate is Action Hotels' project management company.
Action Hotels' share of the total cost of the project is USD6.3 million, USD1.5 million than originally anticipated under the leasehold arrangements announced in 2014. The company said it will fund the extra cost through existing cash resources.
Return on equity and cash on cash returns are expected to be significantly higher following the transaction, the company said, at 13.2% and 10.6%, respectively, at year three of the operations.
"The opportunity to partner with Action Group Holdings to take ownership in the Tulip Inn Ras al Khaimah is a great value addition for Action Hotels and our shareholders. Through a minimum cash contribution, we were able to structure a transaction that will contribute favourably to Action's operating profit and enable Action Hotels to participate in the capital appreciation of the property. The hotel is currently in the final stages of conversion with fit out works being completed with formal opening during quarter one of 2016," Chief Executive Alain Debare said in a statement.
Shares in Action Hotels were untraded on Wednesday, last quoted at 56.65 pence.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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