2nd Oct 2014 07:18
(An items published at 0805 BST misstated the nature of the location of the development. The correct version follows.)
LONDON (Alliance News) - Action Hotels PLC Thursday said it is in the final stages of agreeing terms with an unnamed international partner for a long-term management agreement on a new hotel in the United Arab Emirates.
The 104-bedroom, 3-star hotel is located in the Ras al-Khaimah emirate. It has been developed as a residential property and is owned by Action Real Estate Company.
Under the deal, Action Real Estate, which is controlled by the same company as Action Hotels, will lease the property to Action Hotels for an initial period of 20 years for an annual rent of AED2.5 million. As the two are controlled by the same company, the lease agreement constitutes a related party transaction under AIM rules.
Action said it has signed a 20-year lease agreement on an existing residential development and is to undertake a refurbishment and conversion of the interior of the Ras al-Khaimah hotel.
Action expects the project to cost USD4.8 million, to be funded though existing cash and debt facilities.
"As we highlighted at the time of our interims results earlier this month, this development underpins our strategy of using both freehold and leasehold models to accelerate growth in room numbers. Whilst we have shown to enjoy significant development uplifts on our freehold hotels, leasehold hotels are less capital intensive and which the board believes will lead to accelerated EBITDA growth," said Sheikh Mubarak A M Al Sabah, Action Hotels' Chairman and Founder.
Action Hotels were untraded at the open on Thursday, quoted at 71.5 pence.
By Sam Unsted; [email protected]; @SamUAtAlliance
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