SIPP.L Regulatory News (SIPP)

17 Mar 2008 07:01

Hotel Corp (The) PLC17 March 2008 The Hotel Corporation plc Updated Valuation of Dawnay Shore Hotels plc's Properties The Hotel Corporation plc ("the Company"), the AIM listed investment companywhich owns 49.9% of Dawnay Shore Hotels plc ("DSH"), expects to announce itspreliminary results for 2007 by the end of April. The announcement will, asusual, provide information on the results of DSH for 2007. It will also includean update for shareholders by DSH on its strategic plans. The Company alsowishes to notify shareholders that the following release was issued by DSH thismorning. Announcement by Dawnay Shore Hotels plc On 24th August 2007, DSH announced that it was leasing its hotel portfolio toBarcelo Group. In accordance with its normal practice as part of the process ofpreparing its annual financial statements for 2007, DSH has had the propertysubject to these leases professionally revalued. This portfolio, which excludesland held for non-hotel development, has been re-valued for this purpose at£527m. The Board of DSH considers that the current value of the land held fordevelopment is a further £4m. This new valuation is a reduction of £29m from the valuation of £556m given inAugust 2007, immediately after the leases were granted. Compared to the generalsoftening in property yields across the UK hotel market this reduction in valueof 5.2 per cent acknowledges the secure and growing income stream combined withthe strength of the covenant and the attractive inflation-linking features. Theleases place full repairing and insuring obligations on the tenant and provideguaranteed rental growth over the first four years which is inflation-indexedthereafter and can also increase if hotel EBITDA performs well. In the past DSH has successfully exploited the potential for gains in valuethrough developing the portfolio by adding extra rooms and conferencefacilities. This programme is expected to continue and at present DSH hasdetailed plans to add approximately 800 rooms (over 20 per cent of the currentestate) of which 363 rooms have already received planning consent. There arealso schemes for 2,500 sq.m (over 50% of which has planning consent) ofadditional meeting rooms and upgrades for several leisure clubs. The leaseagreement provides a formula for these improvements to be added to DSH's rentalincome. The economics of adding these rooms is highly attractive. The value ofthe development potential of the portfolio is not typically fully recognised ina professional valuation and DSH therefore believes that fulfilling theprogramme will add significantly to net asset value. Enquiries The Hotel Corporation plc 020 7638 9571Barclay Douglas Shore Capital and Corporate Limited 020 7408 4090Graham Shore Citigate Dewe Rogerson 020 7638 9571Margaret George/ Sara Batchelor This information is provided by RNS The company news service from the London Stock Exchange