Elegant Hotels Share Discussion Threads

[lbo] 24/11/2016 20:06

Not sure House or Daphne's is any holy grail of hidden value either. It was noted at the half year results that The House saw RevPAR falls of 7% because of declines in occupancy. Also please read the CBRE valuations properly and were just a snapshot at that time and in their own words "Our Fair Value has been primarily derived using the discounted cash flow methodology". And as we all know the cash flows have been falling since. Also the Daphne's restaurant land still has debt due on it from when it was purchased by Elegant Hotels and the value attributed to Daphne’s as at 15 April 2015 also was just $5.2 million. Also the Daphne’s Restaurant licence agreement has expired. The Group operates Daphne’s Restaurant under a franchise agreement with Caprice Holdings Limited (“Caprice̶1;). The term of this agreement has expired and as a result, the agreement is now terminable by Caprice.

Also please explain how a devaluation in the Bajan dollar to US dollar will be a positive for current holders of Bajan property assets who already bought assets at the inflated currency peg? And Luke has made mistakes and interestingly has not bought all the Vision Capital shares.

[lbo] 24/11/2016 19:29

US$5.46 million of the consideration was paid to Swiss International's holding company, Beach Holdings SA in cash, and Elegant Hotels assumed Swiss International's existing debt of US$12.19 million. A further US$0.35 million was paid to Paynes Bay Ltd ("Paynes Bay") for the business and fixed assets of Waves. Paynes Bay was owned by the current shareholders of Beach Holdings SA and carried out the day-to-day operations of Waves.The expected cost of the renovation and other expenditure related to the transaction was US$4.0 million. The total acquisition and renovation costs of US$22.0 million were funded through additional credit facilities of US$18.5 million as an extension to the Group's existing credit agreement with The Bank of Nova Scotia, an interest-free vendor loan of US$2.0 million repayable over four years, and US$1.5 million of the Group's existing cash resources.

[stemis] 24/11/2016 19:14

Yes, before the £4m capex. They paid £18m for something worth £22m hence the £4m gain. They then spent £4m upgrading it. Total cost = £22m, total value = £26m

[lbo] 24/11/2016 19:05

"The Waves Hotel & Spa property was recently valued by Terra Caribbean at $22.0 million which is the fair value used in the accounts"

[stemis] 24/11/2016 17:57

Take that most recent Waves valuation and apply it to the rest of the Elegant legacy hotel portfolio which totals 483 rooms and you get a value of $152m which is a long way short of the supposed $235.5 million by CBRE as at 15 April 2015.

Alternatively EHG got a good deal on buying Waves and bought it at below market value. The accounts record a $4m gain on acquisition. Applying that to your formula gives $205m overall or 106p a share. Of course that doesn't take account of the higher quality rooms in other hotels so no reason to doubt the company's valuation. To the extent we have a difference of opinion, we have on one side an international firm of property experts/valuers and on the other an anonymous bulletin board poster (no offence)...

[spooky] 24/11/2016 16:58

Luke is unlikely to have made a mistake long term, the question is whether the news over the shorter term is a problem for weak/trading holders.

[che7win] 24/11/2016 16:29

Wave comprises of 70 hotel rooms, whereas the rest of the portfolio comprises of 333 suites and 150 rooms.

I suppose we just ignore Daphnes or accept that Luke Johnston made a terrible mistake, lol.

[lbo] 24/11/2016 15:25

Waves was bought for $18m plus the $4m Cap Ex so valued at $22m. Which when divided by the 70 rooms puts a value of $315,000 per room.Take that most recent Waves valuation and apply it to the rest of the Elegant legacy hotel portfolio which totals 483 rooms and you get a value of $152m which is a long way short of the supposed $235.5 million by CBRE as at 15 April 2015.And adding the legacy hotel portfolio of $152m plus Waves gives total Asset value of only $174m. And Based on net debt of approximately $54.8 million as at 31 March 2016, this would equate to an implied net asset value (NAV) of under $120m. Which gives an NAV of only $1.06 per share which at current exchange rates is only 0.85p per share.And this still applies no discount for the higher Cap Ex still required on the legacy hotel portfolio compared to the new refurbished Waves value and no normal market discount as would be applied to any other Listed hotel shares or property shares.So even without being worried about the recent profit warnings and major cuts in EBITDA forecasts not sure the NAV is as strong or will be supportive as some would have tried to make us believe.

[che7win] 24/11/2016 15:01

Tamarind Black Friday deal:

[che7win] 24/11/2016 14:53

Another positive article and plug for Elegant:

[che7win] 24/11/2016 14:53

Thanks LBO,
although the articles are about a failing property fund (i.e irrelevant to EHG), I appreciate the positive snippets, very positive, if I can pick and choose quotes from your article as you have done:

"The Barbados economy is finally expected to
show some growth this year on the back of
increased tourist arrivals."

Also think there is a devaluation possibility of the local currency - if that happens a great boost for the tourist industry.

[lbo] 24/11/2016 14:07

The Fortress Caribbean Property Fund Limited SCC - Development Fund realised a loss of $320,801 for the six months ended March 31st 2016 compared to a loss of $350,638 for the same period in 2015. The net asset value is $0.46 per share down from $0.48 a year earlier. The net assets are $24.91 million compared to $25.23 million for the financial year ended September 30, 2015. There were no asset sales during the six months ended March 31st 2016. The share price of the Development Share on the Barbados Stock Exchange (BSE) as at March 31st 2016 was $0.19, a discount of 58% to the net asset value

[spooky] 17/11/2016 22:22

LBO - I have seen your posts over a number of years, i didn't realise you were such a plonker. Regrettably i have decided to add you to the filter list.

[lbo] 15/11/2016 14:41

Elegant themselves mentioned the issue in the market in the interims;

"growth has been in the villa rental segment and at the lower-cost end of the hotel market"

Also the IMF have noted the issues in the Barbados Hotel market also;

[salchow] 15/11/2016 13:53

Interesting re airbnb but I would think hotels at the high end are less likely to be affected. Over the years we have rented maybe a dozen holiday apartments and villa's. If there is a group of people travelling then a villa has always been a logical choice but I don't think any private property we have been to has matched our own home and often falls short on cleanliness. If it is just my wife and I that are travelling then it will always be a good hotel. You have got breakfast provided, laundry and other services on hand and facilities that a private home cannot provide.

[che7win] 09/11/2016 07:16

Sterling rising against dollar, positive for EHG.

[nw99] 08/11/2016 20:58

Huge thanks to @CaribJournal for their amazing article & video of The House, or as they called us "The Best Adults Only Hotel in Barbados!"

[nw99] 08/11/2016 20:57

Very nice thanks for the link

[lbo] 08/11/2016 20:25

FYI they sold/exited cruise in August!

[stemis] 08/11/2016 19:05

I think the only likely connection between Neilson and EHG (and indeed Cruise Co) is that Johnson is clearly positive on the sector

The travel sector has experienced a tough few years, but with the advent of improving consumer confidence, we believe it is a good time to back specialist, differentiated operators.”

hxxp://riskcapitalpartners.co.uk/2013/11/25/risk-capital-partners-backs-neilson-uks-leading-active-holiday-company/