CapitaLand Ascott Trust (CLAS) says it is extending its hotel management agreement with Ascott Hospitality Management (UK) for The Cavendish London for an additional five years.
In a bourse filing on Dec 31, CLAS says the extension will bring the initial term of the management agreement to 35 years, with all other terms and conditions remaining the same.
Earlier, on Oct 9 2023, CLAS entered into a purchase agreement to acquire The Cavendish London at a share purchase consideration of GBP116.3 million ($201.3 million). The Cavendish London was acquired alongside two other properties, the Temple Bar Hotel in Dublin as well as the Ascott Kuningan Jakarta. The acquisitions were completed on Nov 30 2023.
According to the Dec 31 filing, the estimated costs of renovating and rebranding The Cavendish London have gone up to GBP77.3 million from GBP55.0 million due to regulatory changes, remediation of latent site conditions and higher-than-expected inflationary pressures. The terms of the Cavendish Management Agreement announced in 2023 required the Cavendish Operator (wholly-owned by The Ascott Ltd) to contribute 50% of the costs of the renovation and rebranding of The Cavendish London, with the remaining balance 50% to be borne by CLAS.
CLAS says the property’s post-renovation stabilised ebitda yield is expected to be 6.1% and its valuation on a stabilised basis will remain unchanged at GBP316.0 million. The Cavendish London has 230 units and a gross floor area of 10,900 sqm (117,326.62 sq ft).
Units for CLAS closed 0.53% higher at 95.5 cents. CLAS is up by 9.77% year to date.
