€1.4B Hotel Owner To Be Taken Over As NAV Discounts Disappear
Hotel company Dalata Hotel Group has agreed to be taken over by a Scandinavian joint venture in a deal that values the company at €1.4B (£1.2B)
The board of Dublin-listed Dalata has recommended an offer from Swedish hotel owner Pandox and Norwegian investor Eiendomsspar that is 35% above its share price before it announced a strategic review. The sum is almost exactly the same as its €1.42B net asset value.
But there could still be a twist in the tale of Dalata control, as has been the case in other recently listed real estate M&A processes, including the bidding around healthcare REIT Assura and logistics owner Warehouse REIT.
Green Street News reported in June that a joint venture between London & Regional Properties and Davidson Kempner was circling Dalata, and it could come in with a higher bid.
A window opened earlier this year during which bidders snapped up listed companies at a premium to the target’s share price but a discount to their NAV. But share prices have risen recently — the FTSE 350 Real Estate Index is up 6% this year — narrowing the discount to NAV at which shares trade.
Dalata operates a portfolio of 55 hotels, mostly in Ireland and the UK, though it has an increasing presence in major British cities as well as continental Europe. It reported 7.3% revenue growth last year, while adjusted earnings before interest, taxes, depreciation and amortisation of €234.5M beat estimates.
Its pipeline totals 1,867 rooms, including one hotel each in London and Madrid, two each in Edinburgh and Dublin — subject to Ireland’s Competition and Consumer Protection Commission — and three extensions to existing hotels. Dalata's total number of bedrooms will reach more than 13,500 upon completion.
Pandox owns, develops and leases hotel properties to operators under long-term, turnover-based leases. It has expanded its portfolio to 163 hotel properties with approximately 36,000 rooms across 11 countries in Northern Europe.
Eiendomsspar is one of the largest real estate owners in Norway and owns 11 hotels in the country, with another two hotels under construction. Eiendomsspar controls about 36% of Pandox voting shares.
