Talk of Brexit may have some investors skittish to pull the trigger on UK transactions. Hong Kong-listed Magnificent Real Estate is not one of them.
According to the South China Morning Post, King Express Development, a wholly owned subsidiary of Magnificent, paid just over 70 million pounds for the 408-room Travelodge London Kings Cross Royal Scot Hotel.
“We are probably the first company to buy a property in London amid the Brexit overhang,” said William Cheng Kai-man, chairman of Magnificent.
King Express Development, a wholly owned subsidiary of Magnificent, has agreed to buy the 408 room-Travelodge London Kings Cross Royal Scot Hotel at 100 King’s Cross Road for 70.3 million pounds, according to the company.
The pall of uncertainty cast over the UK after it voted to leave the EU was partly used as reason for the acquisition.
Cheng told SMCP that the uncertainties "provided the company an ideal opportunity to get into the high-demand hotel sector in London, and the falling currency has made the deal more attractive."
Cheng added that the big drop in the currency value was a huge advantage.
The British pound fell 3 percent to 1.3269 against the U.S. dollar on Monday, extending its largest one-day drop ever at the end of last week.
The transaction comes to a price per square foot ofHK$5,000, and less than HK$2 million a room, which has the company calling the deal "an undervalued, but ideal, acquisition opportunity."
“These are inherent advantages and are not related to whether England remains in the EU or not. The cheaper currency will bring more tourists and investors to London, a city that is known for its rich heritage, life style, architecture, asset protection etc.,” said Cheng.