Staycity refinances with ISIF taking 13% equity stake
Aparthotel operator Staycity has concluded a €70m (£63m) debt and equity refinancing.
The funds will ensure it can withstand the challenges of Covid and allow for future expansion and investment, with plans to almost double its estate over the next 18 months.
ISIF (the Ireland Strategic Investment Fund) has taken a 13% stake in the business and committed a debt financing position. As part of the deal, existing shareholders have agreed to invest €7m (£6m) for ordinary equity alongside ISIF.
With cash and undrawn facilities of €50m-€60m (£44m-£53m), Staycity said it was "in a strong position" to deal with the impact of the pandemic on its business over the next couple of years and "maximise opportunities that are likely to emerge in the recovery phase".
In addition, a new £30m loan from UK bank OakNorth was used to top up cash and repay existing debt.
Staycity chief executive and co-founder 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."
Deepesh Thakrar, senior director of debt finance at OakNorth Bank, added: "Staycity is a phenomenal business – it has been profitable both at 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% – a clear demonstration of both the strength of the business model and the management team."
OakNorth Bank was advised on the deal by Lee Federman, partner at Jones Day.
Dublin-based Staycity's expansion has seen the company grow from a single apartment in Dublin in 2004 to 21 aparthotels. Over the next 18 months the group is set to open 10 properties in locations including Manchester, Dublin, Bordeaux, Paris, London and Frankfurt and almost double its operating estate to more than 5,100 keys.
Serviced apartment real estate specialists Saxbury are partnering with Staycity to relaunch a site in the City of London's Middlesex Street, reinstating its features and historic facade and opening it under the premium Wilde by Staycity brand.
Wilde by Staycity Middlesex Street is due to open in spring 2022 with many bespoke aparthotel suites, a grand reception, café and lounge area.
Working with joint agents MRP Group and LVK Real Estate, Saxbury secured Staycity on a 30-year FRI lease following a marketing campaign and competitive bid process. The site's developer and landlord is Glenwell Group.
Adam Lowenthal, co-founder of Saxbury, said: "Having agreed heads of terms at the end of 2019, Covid-19 certainly slowed down the legal work and planning process. We're delighted that, despite these challenging times, we were able to secure this partnership with Staycity as it enters a new chapter with ISIF backing."
Neil Short, Staycity's development director, London, said: "This is an exciting opening for Staycity, with this fantastic location in one of London's most vibrant areas. Our Wilde brand has gone from strength-to-strength since we opened the first in London's Covent Garden, with guests enjoying its vivacious playful design and luxury touches. We're looking forward to taking the brand into Middlesex Street, where we believe it will prove a perfect fit."
Barry Hickey, Staycity's group development director, added: "Great credit is due to Glenwell Group and Saxbury for working diligently through difficult times. Staycity were delighted to be chosen as the preferred operator from a strong pool of competitors. The subsequent strength of the partnership adopted by both parties, underpinned by Staycity's resilient business model and strong covenant, enabled a successful conclusion of the deal."
In 2019, Staycity's turnover grew 14% to €78m (£70m), with earnings before interest, tax, depreciation and amortisation (EBITDA) rising around 11% with like-for-like occupancy of 87%. Until the coronavirus pandemic, the company was on target to deliver revenues of €100m (£89m) in 2020, along with continued profit growth.
Its properties are typically made up of studios, one-bedroom and two-bedroom units with fully equipped kitchens, dining and sitting areas and weekly housekeeping. Many sites have car parking and in normal trading times offer a gym, guest lounge, laundry facilities and Staycafé selling breakfast, snacks and drinks.
