Pandox AB (publ) has completed the acquisition of three aparthotels in central London for £230 million, adding 503 rooms to its portfolio in the UK capital. The hotels, branded Residence Inn by Marriott and managed by Axiom Hospitality under a management agreement, were acquired using available cash and a green bank loan, reflecting Pandox's commitment to sustainable financial practices.
Each of the properties has recently undergone extensive refurbishment to meet the high standards of the Residence Inn by Marriott brand:
- The Residence Inn by Marriott London Kensington, built in 2009 and refurbished in 2018, offers 315 rooms as well as facilities such as a restaurant, bar, gym and laundry services.
- The newer Residence Inn by Marriott London Bridge, built in 2017 and refurbished in 2019, has 101 rooms and offers breakfast, gym access and laundry services.
- Finally, the Residence Inn by Marriott Tower Bridge, built in 2009 and refurbished in 2017, has 87 rooms, with similar facilities, tailored to the needs of business and leisure travellers for short or extended stays.
In financial terms, the acquisition includes both properties and hotel operations, with an estimated underlying value of approximately SEK 3,100 million. The properties, all freehold, are expected to generate initial annual revenues of approximately £34 million and net operating income of £17 million, corresponding to a yield of over 7%. Pandox also plans to increase the average daily rate and improve yield through targeted investment.
Thanks to the good energy performance of the properties, the acquisition was partly financed by a new green bank loan, a first for Pandox. This financing, with a credit margin below the average for the company's loan portfolio, is in addition to other loans already linked to sustainability at group level. This transaction brings the market value of Pandox's hotel portfolio to approximately SEK 73,900 million, with 19.8% of the portfolio allocated to own operations and 23.3% in the UK. The company's net debt to equity ratio increases slightly to 48.4%.
The new aparthotels will be integrated into Pandox's Clean Operations business segment. With this acquisition, Pandox significantly strengthens its presence in London, where it already owns three other properties, namely the Leonardo Hotel London Croydon, the Hilton London Heathrow Airport T4, and the Hilton Garden Inn London Heathrow Airport, representing a total of 1,002 rooms. This strategic expansion demonstrates Pandox's commitment to consolidating its position in the London market while pursuing its strategy of sustainable growth.
“We are happy to have acquired three well-positioned freehold aparthotels in strong locations in central London, thereby increasing our exposure towards the attractive ‘extended-stay’ segment. The hotels are highly profitable, and the hotel products are well established in the market with strong distribution via Marriott International, which becomes a new cooperation partner to us. The hotel properties are of high technical and environmental standard and contribute positively to the overall quality of our hotel property portfolio. Through the acquisition, we also increase our already strong hotel operating partnership with Axiom Hospitality to a total of eight hotels in the UK.” - Liia Nõu, CEO of Pandox
