SAMHI Hotels and GIC announce a JV for upscale and higher hotel assets in India

Global institutional investor GIC and branded hotel ownership and asset management platform SAMHI Hotels have entered into a ‘strategic partnership’ to establish an investment platform for upscale and higher hotel assets in India. The transaction involves three of SAMHI’s subsidiaries that own Courtyard & Fairfield by Marriott Bengaluru ORR, Hyatt Regency Pune and recently acquired Trinity Hotel in Bengaluru Whitefield. GIC will acquire a 35% stake in these three subsidiaries against an investment of Rs 752 crore. In disclosures to the BSE, the company said Rs 603 crore will be used upfront to reduce the debt across SAMHI’s portfolio and a small amount will be towards deal expenses. Rs 149 crore will be used over next two years to part fund the capital expenditure for the Westin Tribute Portfolio Bengaluru Whitefield dual branded hotel. SAMHI said it expects a Rs 580 crore reduction in debt and a 15-20% upward impact to profit after tax on account of this transaction.

The company said the partnership will be incubated with five of SAMHI’s hotels with more than 1,000 rooms (the seed assets) valued at Rs 2,200 crore.

The hotels include the the Hyatt Regency Pune, with 301 rooms (and upcoming 22 apartments), the Courtyard by Marriott – Bengaluru, ORR with 176 rooms, the Fairfield by Marriott – Bengaluru, ORR with 160 rooms, the Trinity Hotel – Bengaluru, Whitefield with 142 rooms which will be converted as part of Marriott’s Tribute Portfolio and an under development 220 rooms Westin Hotel, which is being added to the existing Trinity Hotel in Bengaluru.

SAMHI said the investment will be used for capital expenditure, future acquisitions and to reduce leverage across hotels. It will manage all the operational and development assets in the platform.

“We are pleased to announce this transformational partnership with GIC. We have a strong track record in the hotel sector in India and GIC brings unparalleled institutional capabilities for us to benefit from. In addition to helping us strengthen our balance sheet, this partnership gives us tremendous firepower to grow our portfolio,” said MD and CEO Ashish Jakhanwala.

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Morgan Stanley acted as the exclusive financial advisor to SAMHI on this transaction.

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