Oaks Hotels & Resorts is looking to raise $35.7 million to seed the company’s growth in the serviced apartment markets.
Oaks’ chief executive Brett Pointon said the company is presently committed to aggressively expanding its portfolio both in Australia and offshore, and are currently evaluating a number of attractive opportunities, including individual properties and multiple MLR’s from existing operators.
He added that Oaks has significantly consolidated its market presence through expanding its portfolio to 30 properties since its IPO in late 2005.
“Since our IPO we’ve invested the funds raised at that time in acquiring the MLR’s for 10 new properties, at a cost of $35.1 million.
“An additional $17.4 million is committed on six other properties which are expected to progressively add 726 rooms to our serviced letting pool between now and December 2008,” he said.
Pointon said that as one of the few purely MLR businesses in Australia to be ASX listed, Oaks was ideally placed to capitalise on the rapidly increasing demand for serviced apartment accommodation, and on the continued pipeline of new strata titled apartment developments across the country.
“Highlighting the growing popularity of the style of accommodation Oaks specialises in, is the fact that between 1998 and 2005 demand for serviced apartment room nights has grown at 11.2%p.a, a rate more than three times faster than traditional hotel nights,” he added.
Proceeds from the one for six renounceable pro rata issue of new shares at $1.65 each will also be used to retire debt.
Pointon said that assuming the repayment of approximately $34.2 million of current debt, it was estimated that the company would have access to available debt funding of between $50 million and $55 million to acquire new MLR’s on an ongoing basis.
In Oaks’ prospectus, directors updated the prior forecast for group profit after tax for the 2007 year from $14.02 million to $14.28 million and reaffirmed their previous expectation to pay a 7.5 cent fully franked dividend for FY 2007.
By Kathryn O’Meara
