Starting the new year with a bang

We’re just two weeks in to the new year and despite the obvious short-term difficulties we are all facing, the strength of our industry has been amply demonstrated by two major UK deals which have made the news this week.

Lamington Group’s room2 has completed the sale and leaseback of its flagship Southampton property to a fund managed by Aberdeen Standard Investments (ASI), the UK’s largest active asset manager.

For a relatively new brand with just two trading properties, to secure such a major institutional partner is not just a feather in room2’s cap but a real vote of confidence in the aparthotel model and the wider sector.

The fact that the deal was agreed prior to the pandemic and was completed with no discount from its pre-Covid valuation is an impressive endorsement of the way extended stay properties have traded through the lockdowns – in room2’s case seeing an average occupancy of 70 per cent across its London and Southampton hometels.

A further boost came with Cain International’s provision of a £74 million development loan to Canary Wharf and edyn for a Locke aparthotel. Cain’s Matteo Milan said he anticipates that aparthotels “will experience a particularly pronounced uptick in performance as businesses look for a more cost-effective alternative to hotels and as increased flexible working might lead more individuals to live further out from city centres, increasing the need for occasional overnight stays or accommodation when working on a specific project”.

Times are tough right now, but I expect to see more of these deals, plus company M&A activity, as the progressive players in the space position themselves for the medium- and long-term hospitality recovery, a recovery that will be led by serviced apartments and aparthotels.