Samhi sold two hotels in 2023: one in Ahmedabad, and one in OMR Chennai. This is because they acquired hotels in the ACIC portfolio that were in nearly identical locations as these hotels.
For example, they sold the Fairfield by Marriott, Chennai (OMR), and acquired Four Points by Sheraton, Chennai (OMR) in the ACIC portfolio. These two buildings share a wall.
Similarly in Ahmedabad, the two hotels are separated by a ten minute drive. Ahmedabad is a very volatile market with 4000 keys of supply. It doesn’t make sense for a Samhi to have this much exposure to a micro market. It would make sense to have multiple hotels in a Bangalore which is a 17,000 key market.
In one year post acquisition, ACIC portfolio does an EBITDA margin of around 38%. This means they did the acquisition at around 12-13x FY25 EV/EBITDA net of the land written off. I think it’s a sign of prudent management to be honest and provision for a disputed land up front. They are confident of winning a favourable judgement here, which could result in a writeback of 70 Cr. There is no more downside to the land parcel now post provisioning.
D: invested, biased, largest position in my portfolio. No recent transactions.
| Subscribe To Our Free Newsletter |
