Skyline Investments Inc. Announces Closing of an Acquisition of 13 Courtyard by Marriott Select-Service Hotels for $135 Million USD
Toronto, Ontario--(Newsfile Corp. - November 15, 2017) - Skyline Investments Inc. (TV: SKLN) is pleased to update its August 4, 2017 press release and to announce that it has closed the purchase of 13 Courtyard by Marriott Select-Service hotels in the US for $135M USD (excluding transaction costs), the largest deal in the Company's history. Following this acquisition, Skylines owns 19 income-producing assets totalling approx. 3,200 guestrooms spread over 18 cities in the US and Canada. In 2016 the 13 hotels generated revenues of about $51.1 million USD and NOI of $14.5 million USD.
As part of the acquisition process, Skyline (on behalf of its wholly owned US subsidiary) has signed the following agreements:
- The Company signed with Marriott International new 20-year franchise agreements for the Courtyard by Marriott brand. Based on these agreements, all 13 hotels will continue to operate under the Courtyard brand and will benefit from access to Marriott's industry-leading reservation and sales platforms. The Courtyard brand began more than 30 years ago and is now considered one of the leading hotel brands with more than 1,000 hotels in 47 countries.
- The Company signed management agreements with Aimbridge Hospitality LLC, the largest third-party operator of Marriott-branded hotels, to operate the 13 acquired hotels for a period of five years. The agreement can be terminated earlier by the Company or extended upon notice. As part of the closing, Aimbridge has successfully transitioned all 13 hotels from the previous Marriott brand management.
- The Company signed a non-recourse loan agreement for $89.5 million USD financing 65% of the transaction costs at annual variable interest equal to LIBOR + 325 points (approx. 4.50%). The loan is interest only and is issued for a total period of five years including three annual extensions, subject to various conditions, including the primary condition of maintaining particular levels of debt yield on the extension dates ranging between 10% to 11%. The bank also provided a $31 million line of credit at the same terms that can be used for property improvements and upgrades.
In related news, Skyline Investments Inc. has successfully completed its previously announced corporate unsecured Series B Debenture financing for a total of approx. 164.5 million NIS (approx. $58.4 million CAD). The Series B Debentures are linked to the NIS/US dollar exchange rate and were issued with a fixed interest rate of 5.65%. The Series B Debentures commenced trading on the Tel Aviv Stock Exchange on September 28, 2017.
Furthermore, in August 2017, the Company received an initial conditional rating of Baa1.il with a stable outlook for the new Series B Debentures from Midroog, the Israeli subsidiary of the international rating company Moody's. Upon completion of the transaction, Skyline successfully met all the required conditions for the Baa1.il rating.
Blake Lyon, Skyline CEO: "We are pleased to announce the completion of the acquisition of 13 Courtyard by Marriott Select-Service hotels. This is an important step in the implementation of Skyline's new business strategy to increase the number of income-producing assets, diversify the Company's sources of income, improve the cash flow and reduce part of the land component in the balance sheet. Looking forward, we expect in 2018 to show a significant increase in our revenues and cash flow as a result of this new acquisition, the largest in Skyline's history, recent improvements and expansion of existing Skyline assets, and from a number of development projects in advanced stages of sale which we expect will be delivered next year."
Skyline Investments Inc. is a Canadian company that specializes in hospitality real estate investments in Canada and the US. The Company owns 19 assets in Canada and the US with 3,200 hotel rooms under management spread over 18 cities, and development lands with rights for almost 3,300 residential units in three main areas north of Toronto.
The company is traded on the Tel Aviv Stock Exchange (ticker: SKLN) and is a reporting issuer under the securities laws of Ontario, Canada.
For more information, please go to our website at www.skylineinvestments.com, or call Ben Novo-Shalem, Head of M&A and IR, at 416 368-2565 ex.2222; or go to the websites of the Ontario Securities Commission www.sedar.com or the Israeli securities regulator www.magna.isa.gov.il.
Any forward-looking information is intended solely for the date to which it relates. Except for the undertaking to disclose information as required by the securities laws applicable to the Company, the Company does not undertake to update or modify any information contained in this notice, whether as a result of new information, future events or other reasons.
Skyline Investments Inc.
Chief Executive Officer