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Wed 6th Dec 2017 - Update: Shaftesbury to raise £265m, Hammerson to acquire Intu, Easyhotel results, Deliveroo
Shaftesbury to raise £265m to help fund acquisitions: Shaftesbury, which is landlord to 282 pubs, restaurants and cafes in the West End, is to raise up to £265m through a share placing for projects, which includes acquiring 72 Broadwick Street for £92m. The company will place up to 27,855,508 new ordinary shares of 25p each at 952p per share, representing approximately 9.98% of the current issued share capital of the company. The company stated: “The net proceeds are intended to be used to finance the acquisition of 72 Broadwick Street for £92m (including costs) with additional anticipated capital expenditure of approximately £20m; to finance the acquisition of a long-leasehold interest in 90-104 Berwick Street for £41m (including costs and £2m deposit paid in August 2017) announced on 21 August. Completion of the acquisition is anticipated in late 2018, following completion of the vendor’s redevelopment scheme; to fund £9m of other property acquisitions in the preceding six months; and the remainder of the proceeds will be used to provide financial capacity for further acquisitions, as opportunities arise and to fund value-enhancing schemes (including approximately £12m to complete current schemes. The group announces that it has acquired the freehold of 72 Broadwick Street, situated at the eastern gateway to Carnaby, for £92m (including costs). In its current configuration, the building provides 54,100 square foot of office accommodation, 11 apartments extending to 11,200 square feet and a large basement car park. It produces an income of £3.1m, of which £2.6m will cease when the office tenant vacates at the end of September 2018. The purchase initially increases the proportion of total group income derived from offices by circa 2% to 19%. The freehold interest that has been acquired is subject to an existing un-geared long lease to the group over the ground floor and part of the basement, comprising 13,900 square feet of retail and a cafe. This leasehold interest was valued at £66.8m in the company’s 30 September 2017 results. The acquisition gives the group control over this strategically important 0.5-acre site. Subject to planning consents, it will provide opportunities, through change of use, reconfiguration and refurbishment, to create valuable new retail and restaurant space in the building. The office space remaining after these changes, together with the residential accommodation, will be refurbished. The group’s plans include the relocation of the office entrance to the prominent eastern corner of the building on Broadwick Street. The estimated cost of the improvements is £20m. As previously announced, the group has contracted to forward-purchase a long leasehold interest in 90-104 Berwick Street at a price of £41m (including acquisition costs). Located at the southern end of Berwick Street, the property currently is being redeveloped to provide 12,500 square foot of retail, a 5,500 square foot supermarket, a 2,000 square foot restaurant and a 110-bedroom hotel. Both the hotel and supermarket have been pre-let. This represents two-thirds of the expected income from the property. The redevelopment is expected to complete in late 2018, which will, subject to satisfying various contractual conditions, trigger the completion of the acquisition. Once completed, the group’s ownership of Berwick Street frontages will rise to about 50%, enabling it to accelerate its long-term strategy for this important north-south route in the heart of Soho. In addition to these acquisitions, and £9m of other properties acquired in the past six months, the group expects to see acquisition opportunities within its core locations. The buildings the group seeks to acquire are often in long-term private ownership and existing owners are often reluctant to sell. Consequently, the timing of purchases is unpredictable. However, over the past five years, acquisitions have averaged £52m per annum.” Chief executive Brian Bickell added: “We are pleased to have secured the important, strategic ownership of 72 Broadwick Street, in the centre of Carnaby. It offers exciting opportunities to reconfigure space on the lower floors to provide new restaurant and retail space, adding to Carnaby’s renowned variety of shops, restaurants and leisure choices. The upgraded office and residential accommodation will benefit from their proximity to the new Crossrail ticket hall in Dean Street and Broadwick Street’s growing profile and footfall as a major east-west route in Soho. Securing additional equity will support the continuing expansion of, and investment in, our exceptional portfolio located in the heart of London’s West End.” 

Hammerson to buy Intu for £3.4bn: Hammerson has agreed a deal to buy Intu for £3.4bn. Hammerson stated: “The boards of Hammerson and Intu believe that there is a compelling strategic rationale for the acquisition, which will bring together their high-quality retail property portfolios and their combined expertise to create a leading European retail real estate investment trust with a strong income profile and superior growth prospects. Both boards believe that following the acquisition, the enlarged group will be better placed to enhance its position in its geographic markets and across its retail formats, with a more efficient and adaptable platform allowing it to respond to fast changing consumer preferences and retail trends. Hammerson and Intu believe the acquisition will create a £21bn pan-European portfolio of high-quality retail and leisure destinations, with enhanced exposure to high-growth markets and which will benefit from evolving consumer trends; and unlock growth and value creation opportunities for shareholders by bringing together Hammerson’s and Intu’s leading assets, which have strong fundamentals, under a superior combined operating platform. It will offer attractive growth prospects with exposure to two of Europe’s fastest growing economies of Ireland and Spain and additional sources of capital to forge ahead with ambitions to expand the Premium Outlets platform; and provide the opportunity for significant rationalisation of the enlarged group’s property portfolio through an anticipated disposal programme of at least £2bn. This will both strengthen its balance sheet and provide liquidity to reinvest in higher return opportunities. The acquisition will allow the enlarged group to draw on its combined consumer know-how and apply both companies’ expertise in events, customer service and digital to drive footfall, delivering highly productive space for retailers and attractive destinations for consumers; benefit from the Intu brand and Intu’s online experience; bring opportunities to deploy Hammerson’s strong track record in delivering successful developments across an enlarged pipeline; and provide opportunities to deliver synergy benefits through cost reductions and optimisation of the enlarged group’s financing arrangements.” The group will be led by Hammerson chief executive David Atkins and chief financial officer Timon Drakesmith. Hammerson chairman David Tyler will be chairman of the new group with Intu deputy chairman John Whittaker becoming deputy chairman. Current Intu chairman John Strachan will join the board of the as senior independent director. The new company will have six directors nominated by Hammerson and four by Intu. Tyler said: “This transaction will deliver real value for shareholders. The financial strength of the enlarged group and its strong leadership team will make it well-placed to take advantage of higher growth opportunities on a pan-European scale.” Atkins added: “The acquisition creates a leading pan-European platform of desirable retail and leisure destinations which are better positioned to serve the needs of our retailers, excite our customers and support our partners and communities. I hold Intu’s high-quality centres in high regard and I look forward to working with a strengthened team to enhance the performance of our entire portfolio.” Strachan said: “A combination of both Intu and Hammerson will create a more resilient, diversified and stronger group that we believe will benefit all our stakeholders. Intu offers high-quality retail and leisure destinations in the UK and Spain, which when merged with Hammerson’s own top-quality assets in the UK, in France and in Ireland, present a highly attractive proposition for retailers and shoppers in Europe’s leading cities. I am proud of the financial and operational success that Intu’s management team has delivered and pleased to see that the Intu brand will continue.”
Easyhotel reports ‘strong progress’, considering finance options to accelerate growth: Easyhotel, the owner, developer, operator and franchisor of “super budget” branded hotels, has reported “strong progress” and is considering its financing options to accelerate its growth. Total system sales increased 39.2% to £29.7m for the year ending 30 September 2017 compared with £21.3m the previous year. Owned hotels saw like-for-like revenue increase 13.7%. Like-for-like franchise revenue was up 8.6%, with particularly strong performance in continental Europe. Adjusted Ebitda was up 48.3% to £2.3m compared with £1.6m the year before with margin increased to 27.3% (2016: 25.7%). Pre-tax profit fell 21.1% to £0.9m compared with £1.1m the previous year, reflecting increased costs associated with the expanding development pipeline, the £0.2m net book value negative impact of the closure of two floors at Easyhotel Old Street and the absence of any capital gain this year from disposals (2016: £0.3m). Cash generated from operations increased to £2.2m compared with £0.9m the year before. Five new hotels totalling 535 rooms opened over the course of the year with combined occupancy of more than 85%. It has a total network of 598 owned rooms and 1,750 franchised rooms. Three new owned hotel sites in Leeds, Sheffield and Oxford were secured over the year. A total of 404 owned rooms and 835 franchised rooms have been added to the development pipeline. There is a total development pipeline of 921 owned rooms and 1,798 franchised rooms. Easyhotel Liverpool opened in November, adding 78 rooms to the network while a 104-bedroom Newcastle hotel secured in October will open this month. The company has also acquired of site in Cardiff for development of 120-beroom hotel, subject to planning permission, while two new franchise hotels in the Netherlands will add a further 162 rooms to the development pipeline. Chief executive Guy Parsons said: “2017 has been a year of strong progress for the group as we continue to develop the Easyhotel brand as a market leader in ‘super-budget’ sleep. Impressive like-for-like sales growth has been achieved across our existing network of hotels, underpinned by the smooth implementation of our new booking engine and yield management system across the entire Easyhotel network. We continue to accelerate our growth plans for the brand, targeting carefully selected locations to build our portfolio of owned and franchised hotels and applying strict investment criteria, ensuring we can continue to deliver a blended return on capital employed target of 15%. Five new hotels were opened over the course of the year, with Easyhotel Liverpool opened since the year end. All have traded strongly since opening and we have been delighted with the positive customer reaction to our stylish new brand format. The group’s asset backed balance sheet remains strong but with our current development pipeline we are only able to finance one further owned hotel. We continue to see a good number of attractive potential development opportunities to further accelerate the group’s growth. Consequently, the board is considering its financing options, which may include new equity and debt, to fund these opportunities. While the wider macro-economic uncertainty continues to impact consumer confidence, we believe Easyhotel is well positioned. The refinements that have been introduced to the business over the course of the last year are further strengthening our brand and ensuring the Easyhotel offering is one that can support delivery of the board’s ambitious long-term strategy for growth.”
Deliveroo unveils insurance scheme for drivers: Deliveroo has tried to address criticism of how it treats its self-employed workers by offering them an income insurance policy that protects their pay if they get injured or fall ill. The company said the policy, for which its scooter, motorbike and bicycle couriers would have to pay £1.85 a week, would provide cover when they suffered an injury while working for Deliveroo or when illness left them unable to work. Deliveroo, which provides an online ordering platform and delivery service for branded restaurant chains, has attracted sustained criticism for contentious employment practices for its roughly 15,000 couriers in Britain. It does not formally employ any of its “gig economy” labour force, instead paying them for each delivery they make, which has led to concerns among MPs and unions over a lack of job security and rights. The business has said that it would be willing to pay basic sickness and injury benefits to couriers if UK law is changed. It claims at present it cannot provide such benefits to drivers who at the same time enjoy the flexibility associated with self-employment. If a courier were unable to work owing to illness or an accident that takes place when they are logged into the Deliveroo app, the insurance scheme would pay 75% of their gross income for up to 26 weeks. This would be based on their average gross earnings from Deliveroo in the 12-month period before their injury or illness, Deliveroo said. Dan Warne, Deliveroo’s managing director for UK and Ireland, told The Times: “We would like to go further, but we are currently constrained by the law. We’re committed to providing the flexible work that riders want, alongside the security we believe they deserve.” The illness and accident cover provides up to £2,500 in annual medical expenses cover; up to £2,000 for dental repair; 20 days jury service cover up to £700; and up to £200 if a courier’s mobile phone is damaged in an accident. The company also will offer a £2m third-party liability insurance policy to its cyclists, which will cost £2.82 per month. Last month, an employment tribunal ruled Deliveroo riders were not entitled to basic employment rights, including the minimum wage, holiday pay and union recognition, because they were not technically classed as “workers”.

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