UK Regional Hotel Portfolio Investment
Strategic Investment Management (SI) was the sponsor and operator of SI Limited Partnership No 5, a limited partnership offering investors a potentially tax efficient means of investing directly in the UK commercial property market.
In September 2006, the Partnership acquired a portfolio of three hotels within the UK regional mid-market sector – Birmingham, Gatwick and Hatfield – for a total acquisition price of £73.1m. The acquisition is in partnership with a leading Scottish property company which provided 10% of the equity.
The tenant in each location is renowned UK hotel operator Jarvis, which currently has a portfolio of over 40 Ramada Jarvis hotels and is part of the world’s largest franchisor. The properties have long lease terms, with 31 years unexpired at the time of acquisition. Each hotel is situated in an attractive location within a well-established market and rent is based on annual turnover as is common in the hotel industry.
The three properties were acquired through individual SPV companies, maximising the tax efficiency of the acquisition. Investor equity raised by the Partnership totalled £14.8m, with the remainder of the funding provided by a loan from Nationwide Building Society.
It is intended that SI will seek to realise the investment in the properties within three to five years of the investment.