Staycity shores up finances and looks ahead to better times
20 November 2020Aparthotel operator Staycity Group has announced the conclusion of a €70m (£63m) debt and equity refinancing ensuring the privately-owned company will emerge from the impact of the Covid-19 pandemic fully capitalised and ready to continue with its European plans to almost double the size of the company over the next 18 months and to operate 15,000 keys by 2026/2027.
ISIF (the Ireland Strategic Investment Fund) took part in the fundraising, taking a 13% stake in the business. In support of this investment ISIF has also committed a debt financing position. As part of the deal, existing shareholders have agreed to invest €7m for ordinary equity alongside ISIF.
With cash and undrawn facilities of €50-60 million, Staycity is 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 to the equity raise, a new €33m (£30m) loan from UK bank OakNorth was used to top up cash and repay existing debt.
“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,” commented Staycity CEO and co-founder Tom Walsh.
“We are delighted to have negotiated this funding, which gives us ample liquidity to withstand current challenges and fund future expansion and investment.”
Dublin-based Staycity’s expansion has seen the company grow from a single apartment in Dublin in 2004 to 21 aparthotels – and 2,700 apartments - today. Over the next 18 months the group will 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.
Said Walsh: “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, said: “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. It has 21 sites in its portfolio and plans to increase this by almost 50% next year with the addition of another 10 aparthotels, so the team have very exciting and ambitious longer-term plans. However, they are still being prudent in terms of projections for overall performance and occupancy rates over the next year. We look forward to continuing to support the business in the months and years ahead.”