Belmond acquires Anguilla's Cap Juluca for $84.6M

The Jonquil Suite private pool at the Cap Juluca in Anguilla, British West Indies.

Luxury hotel and leisure company Belmond will acquire the 96-key Cap Juluca resort on the Caribbean island of Anguilla, British West Indies, for approximately $84.6 million.

Beyond the sale, Belmond has also agreed on a 250-year ground lease for property of about 167 acres, including approximately 250,000 square feet of additional developable beachfront land. When the transaction closes by early June 2017, Belmond will manage the resort and will rebrand the resort as Belmond Cap Juluca.

The acquisition will be financed using cash on hand and $45 million of borrowings under the company's previously undrawn $105 million revolving credit facility.

“This acquisition marks an important milestone in the execution of our 2020 strategic growth plan, which includes as a central component the expansion of our global footprint,” said Roeland Vos, president and CEO of Belmond. “The exclusive resort complements our brand by offering an authentic escape to discerning guests, increases our presence in a location where our customers already travel, and enhances our positioning in the global luxury resort market.”

Located on the southwestern coast of Anguilla at Maundays Bay, Cap Juluca opened in 1988. The resort currently has 96 guestrooms, four restaurants and bars, a 1,800-square-foot pool, tennis courts, a fitness center, a library, a private screening room and water sports activities.

After planning and obtaining all necessary permits in 2017, Belmond will renovate the property for $36 million. It will develop 25 more new beachfront rooms, bringing the resort’s total inventory to 121 rooms. The renovation will include the refurbishment of all 96 existing guestrooms, improved food and beverage concepts, upgrades to the spa and new and renovated public areas. The company expects to complete the projects by the end of 2018.

Following these anticipated works, Belmond's total investment in the property will be approximately $1 million per room.

According to a statement, the company anticipates that Cap Juluca will generate adjusted EBITDA of between $12 million and $14 million following renovation and expansion and upon stabilization. It also expects that the resort will start positively contributing to the company's adjusted EBITDA in 2019. For purposes of these calculations, Belmond has ascribed no value to the additional 250,000 square feet of developable land within the resort, including opportunities for residential villa sales, all of which are permitted under its ground lease.