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Breaking News: Mantra Group acquires Hawaii business, set for USA debut

Mantra Group Bob East new 2

Mantra Group Limited has entered into an agreement to acquire ALM Management Services LLC, which operates the Ala Moana Hotel in Honolulu, Hawaii, and associated manager’s lot real estate at Ala Moana which is held by ALM LLC, for a purchase price of US$52.5 million, excluding transaction costs and subject to certain customary completion adjustments and conditions.

As a result, Mantra Group is today (May 18) launching a fully underwritten institutional placement of approximately 27.0 million shares to raise approximately AUD$100 million (at the underwritten floor price of A$3.70 per share) to fund the Ala Moana Acquisition as well as providing Mantra Group with additional capital to fund pipeline opportunities.

Mantra Group’s CEO, Bob East, said: “The Ala Moana Acquisition is an exciting opportunity for the Mantra Group providing a platform to enter a new offshore market with a significant property that is well aligned to Mantra Group’s core business, expertise and growth strategy.

“This acquisition complements our existing portfolio and is expected to make a significant contribution to Mantra Group’s business,” he said.

Mantra Group, via a wholly owned subsidiary, has agreed to acquire ALMMS, which operates Ala Moana, and to acquire associated manager’s lot real estate at Ala Moana from ALM LLC.
The assets to be acquired under the Ala Moana Acquisition consist of:
-High performing condominium hotel business (1,086 keys participating out of a total 1,176 keys
participating in the letting pool);
-Freehold title to reception, administration areas, and all car parking;
-Freehold title to 6 food and beverage outlets; and
-Freehold title to 9 function rooms, totalling 1,350m2

The company says the condominium hotel operating model is similar to the Management Letting Right business model that Mantra Group currently operates and is an area of expertise for Mantra Group.

It says the Ala Moana acquisition is “consistent with Mantra Group’s strategy to selectively expand its presence in key offshore regions via the acquisition of complementary properties in destinations favoured by Australian travellers and other key international markets”.

Ala Moana Hotel Honolulu Hawaii Mantra Group

“Ala Moana is located in Honolulu, Hawaii which has consistently been a strong performer as a holiday and business events destination… Honolulu is Hawaii’s most popular tourism precinct with proven appeal to United States domestic, Australian, European and Asian visitor markets, providing a strong base occupancy for the Ala Moana property,” Mantra Group says.

Comprising a total of 1,086 keys under management, plus freehold title to the Managers Lot real estate (restaurants, conference facilities, reception, car parking and other key management areas), the Ala Moana Acquisition presents Mantra Group with a significant investment opportunity which is aligned with Mantra Group’s growth strategy and is aimed at delivering ongoing shareholder value, according to the company.

The Ala Moana Acquisition is expected to contribute approximately US$7 million in Underlying EBITDAI in the first full year of ownership, before synergies from operational improvements, providing a material Underlying EBITDAI uplift to Mantra Group’s Resorts segment.

“Ala Moana represents one of the major identified pipeline opportunities that management have been pursuing for FY2017. The impact of the Ala Moana Acquisition and today’s Placement is expected to be accretive to Underlying EPS (excluding transaction costs) in FY2017,” Mantra Group says.

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