As part of its 2020 strategic growth plan to expand its global footprint, Belmond Ltd. on Monday announced that it has entered into agreements to acquire the 96-key Cap Juluca on the island of Anguilla for approximately US$84.6 million from the principal owner and three other owners.
When the transaction closes, which is expected to be by early June 2017, Belmond will assume management of the resort, which has historically been independently managed, and will rebrand the resort as Belmond Cap Juluca.
At the same time, Belmond has agreed to a 250-year ground lease for property that comprises approximately 167 acres, including approximately 250,000 square feet of additional developable beachfront land. The acquisition is initially expected to be financed using cash on hand and US$45 million of borrowings under the company’s previously undrawn US$105 million revolving credit facility.
After planning and obtaining all necessary permits in 2017, Belmond expects after the end of the upcoming 2017/2018 season to renovate the existing property and develop a further 25 new beachfront keys. The comprehensive renovation of the existing property is expected to include the refurbishment of all 96 existing keys; improved food and beverage concepts; upgrades to the spa; and new and renovated public areas. The company expects to spend a combined approximate US$36 million on the renovation and expansion projects, which it expects to complete by the end of 2018. Following these anticipated works, the company’s total investment in the property is expected to be approximately US$1 million per key.
Belmond anticipates that Cap Juluca will generate adjusted EBITDA of between US$12 million and US$14 million following renovation and expansion and upon stabilization, and expects that the resort will start positively contributing to the company’s adjusted EBITDA in 2019.
“We believe this one-of-a-kind resort presents a compelling opportunity to build on our past experience of acquiring hotels that can be restored to iconic status through investment in the physical product and enhancement of all operational, sales, revenue management and service functions to drive greater revenue, EBITDA and brand exposure,” said Roeland Vos, Belmond’s president and chief executive officer.