International Hotel Investments (IHI), the trading name of Corinthia Group, has obtained the Malta Financial Services Authority’s approval for a €60 million bond issue as it eyes further international expansion through the inauguration of seven new hotels over the coming three years.

The proceeds from the bond issue, which was announced earlier this month, will mainly be used to rollover bonds maturing later in 2023 and 2024, having a combined value of €45 million.

The remainder will be used for general corporate funding purposes.

The new issue carries a coupon rate of six per cent, one of the highest in the local corporate bond market. The bonds maturing in 2023 and 2024 carry 5.8 per cent and six per cent rates, respectively. 

Subscription to the new bonds will first be offered to holders of the maturing bonds as at close of trading on 19th September 2023, up to the amount of maturing bonds held. The balance will be made available to holders of the maturing bonds wishing to subscribe to more bonds than formerly held, along with preferred applicants, which include IHI shareholders, Corinthia Group bondholders, and Corinthia Group peronnel.

Any remaining amounts not subscribed for by the above will be offered for subscription by authorised financial intermediaries.

All applications are subject to a minimum subscription of €2,000 and in multiples of €100 thereafter.

Upcoming plans

Corinthia Group has seven hotels in the pipeline through to 2026. These are spread across Europe (Brussels, Bucharest, and Rome in 2024), the US (New York in 2024), the Middle East (Doha in 2025 and Diriyah in 2026), and South Asia (Maldives in 2026).

Of these, six are owned by third-party investors. These include prominent investment firm Reuben Brothers (the UK’s second richest family) as well as United Development Company (Qatar’s leading construction firm).

IHI has an indirect 50 per cent shareholding interest in the former Grand Hotel Astoria in Brussels , described as “one of the most prolific and meticulous redevelopment projects that the group has ever been involved in.”

Upon completion in June 2024, the 126-room Corinthia Hotel Brussels will offer amenities including a fully restored grand ballroom, an 850 sqm spa, various dining venues, luxurious boutique meeting facilities, as well as high-end retail outlets.

The group also has a near 12 per cent equity stake in GHA Holdings Limited which, in turn, owns the Global Hotel Alliance, a platform comprising 40 upmarket and luxury brands representing 800 hotels spread in more than 100 countries.

Over the next three years, IHI plans to increase its room inventory by over 11 per cent to 5,627 keys from 5,048 rooms as at 30th June 2023. There will be 316 rooms added in 2024, followed by a further 190 rooms and 73 rooms in 2025 and 2026 respectively.

In addition, IHI is in the process of obtaining the planning approval for the redevelopment of an 83,530 sqm site located in an area known as Ħal-Ferħ, adjacent to the Radisson Blu Resort & Spa, Golden Sands, Malta.

The project is expected to be completed in 2026 for a total redevelopment cost of circa €35 million. It will entail the construction of a low-rise, mixed-use complex – Corinthia Oasis – comprising a 162-key luxury hotel and 25 detached and serviced villas supported by a top-tier wellness centre and spa, food and beverage outlets, as well as a host of ancillary resort amenities.

In 2023, the group set the foundations for the launch of the new Verdi Hotels brand, which will focus on the upper 4-star and lower 5-star segment. The first venture is expected to be rolled out in 2024 and will target the relaunch of some of IHI’s owned hotels and other properties owned by third-party investors, including Libyan Foreign Investment Company (a major IHI shareholder).

Financial outlook

Revenues forecast for 2023 are set to eclipse the pre-pandemic record of €268.3 million registered in 2019, reaching €280 million. In 2024, revenues are expected to increase by a further 22.4 per cent to a new all-time high of just under €340 million.

The projected growth reflects both organic increase in business as well as the new income from the inauguration of four new hotels in 2024.

Corinthia Group has a consolidated asset base of €1.68 billion and net debt gearing of 42 per cent. The asset base is expected to expand considerably to €1.85 billion by the end of the 2024 financial year.