CDL Hospitality Trust buys 95% of four-star Italian hotel for $63.6m

This marks its maiden entry in the country.

CDL Hospitality Trust (CDLHT) acquired a 95% stake in the four-star Hotel Cerretani Florence, Italy under MGallery by Sofitel for $63.6m (€40.6m). The deal is expected to be completed in a few weeks’ time.

According to an announcement, the remaining 5% will be held by the existing minority shareholder, a part of the EVENT Hotels Group.

Hotel Cerretani Florence has 86 rooms and recently went through an extensive phased refurbishment in 2016 for $68.6m (€43.8m).

CGS-CIMB analyst Eing Kar Mei noted that this is CDLHT’s maiden entry into Italy. The country is expected to account for around 1.5% of net property income (NPI).

The lease on the property is about 20 years and the lease structure is based on 93% of the net operating profit of the property, subject to a base rent of €1.3m. Eing said, “We understand RevPAR for the property is around €150 whilst average occupancy rate is more than 75%.”

The analyst noted that with the acquisition will give CDLHT exposure to a historic city such as Florence, which is one of Italy’s most visited cities. “There is also a vibrant exhibition and fair calendar, which includes the ‘Pitti Immagine Uomo’, a biannual international fashion exhibition that attracted more than 30,000 visitors in June 2018,” she added.

Meanwhile, on the supply side, there is limited future room stock due to high barriers to entry stemming from new urban planning regulations prohibiting new hotel developments in the city centre.

A point of concern for the analyst is the lower-than-expected acquisition size and yield. Eing said that their forecasted 2019-2020 earnings per share (EPS) for CDLHT has been reduced to 4.2-4.3%.

Reaching the people who run Asia's businesses is harder than it used to be.

Inboxes are crowded. Attention is short. The executives you most want to reach — the founders, CFOs, and operators who actually move budgets — are the hardest to find through the usual channels. If you're building a company, a category, or a reputation, you already know this.

We've spent twenty years building the room they read. Singapore Business Review is where senior decision makers in Singapore and across Southeast Asia come for business coverage they can't get elsewhere — in print, online, and in person at the summits and roundtables we host across seven markets.

If you have something these readers should know about — a point of view worth publishing, a product worth their attention, an event worth their time — we'd like to hear what you're trying to do.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia