Irish state fund to take stake in Staycity as part of refinancing plan

George Sell George Sell Uploaded 18 November 2020

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Ireland: The Ireland Strategic Investment Fund (ISIF) is to take a stake in Staycity as a part of €70 million refinancing package.

The fund will take a 13 per cent equity stake in Staycity, and will also provide debt as the company continues to push ahead with its European expansion plans, nearly doubling its portfolio over the next 18 months.

Existing shareholders, including the former Green Reit chairman, Stephen Vernon, are committing €7 million in fresh equity, and the company has also agreed a €33 million debt deal with OakNorth, according to a report in The Times.

Staycity currently operates 21 aparthotels and 2,700 apartments across 12 cities. It plans to open a further ten properties in the next 18 months, with new sites in Manchester, Dublin, Bordeaux, Paris, London and Frankfurt. It has recorded occupancy of more than 50 per cent across its portfolio this year.

CEO Tom Walsh said: “Despite unprecedented challenges, we have achieved occupancies above 50% year to date. This is significantly ahead of traditional hotels and underpins the robustness of the aparthotel model which is increasingly regarded as an attractive asset class. We are delighted to have negotiated this funding, which gives us ample liquidity to withstand current challenges and fund future expansion and investment.”

“It’s apparent that full recovery will take some time to achieve but the recent news of the success of the vaccine trials is positive news for the future. Leisure travellers have already demonstrated a demand for short breaks and city-based staycations nearer to home and we are well placed to see our occupancies rise as a result, particularly as our self-catering apartments make social distancing easier," he added.

Staycity recorded turnover of €78 million in 2019, a 14 per cent increase on the previous year, and posted occupancy of 87 per cent.

It had targeted revenues of €100 million in 2020, before the onset of the coronavirus pandemic.

Deepesh Thakrar, senior director of debt finance at OakNorth Bank, said: “Staycity is a phenomenal business - it has been profitable both at the site level and group level for 15 of the 16 years it’s been operating and experienced like-for-like occupancy in 2019 of almost 90 per cent - a clear demonstration of both the strength of the business model and the management team. It has 21 sites in its portfolio and plans to increase this by almost 50 per cent next year with the addition of another 10 aparthotels, so the team have very exciting and ambitious longer-term plans. However, they are still being prudent in terms of projections for overall performance and occupancy rates over the next year. We look forward to continuing to support the business in the months and years ahead.”

 

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