SAMHI Hotels (SAMHI) Status Update summary

Strategic partnership and transaction overview

• Entered a partnership with GIC to create an upscale hotel investment platform in India, with GIC acquiring a 35% stake in three subsidiaries for INR 752 crore, valuing the assets at INR 2,200 crore.

• Upfront INR 303 crore will reduce debt, with INR 149 crore allocated for future development, notably the Westin and Tribute portfolio in Bengaluru Whitefield.

• Transaction aligns with a capital recycling strategy, significantly reducing leverage and strengthening the balance sheet.

• Net debt to EBITDA expected to fall below 3.5x at closing, with a target of less than 3.0x within 12 months.

• Partnership provides a platform for future growth, aiming to double upscale hotel inventory and boost revenues and profitability.

Financial impact and capital structure

• Trailing 12-month EBITDA for the three hotels was INR 133.8 crore as of December 2024.

• Debt reduction of INR 580 crore anticipated, with SAMHI JV and Inmar becoming debt-free, while Ascent Hotels retains INR 200 crore in third-party debt.

• 15%-20% expected PAT upside post-transaction, factoring in both interest cost reduction and minority interest.

• Asset management fee of 4% of EBITDA to be earned by the listed entity, applicable to both current and future assets in the platform.

• Dividend and cash distribution policies in place to ensure access to free cash flows for both partners.

Platform structure and growth strategy

• GIC’s 35% stake achieved through a mix of primary infusion and secondary share purchase; 14% bought from SAMHI for INR 115 crore.

• Platform has right of first offer on all upscale hotel opportunities, including greenfield, brownfield, and acquisitions; no exclusivity on mid-scale assets.

• No fixed target for number of keys; focus remains on disciplined, opportunistic growth and capital recycling.

• Preference for inorganic growth via acquisitions and turnarounds, leveraging core competencies.

• GIC’s involvement is active at the platform level, with no put options except in event of default.