Fattal saved NIS 260 million on rent – the capital market

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Fattal Holdings
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Updates that it has so far signed a settlement with 95% of the group’s rented hotels, and will save NIS 260 million in 2020 as a result of the move. The company also signed a memorandum of understanding to purchase 50% of a property company that owns 4 hotels in central London, with 1,350 rooms.

The hotel owners complied with Fattal’s request for a discount of NIS 140 million in rent for the period between March and the end of the current year, and the group also reached agreements regarding deferral of rent payments of NIS 120 million for the following years, also for the said period. In total, this is a saving of no less than 37% in the rent that was supposed to be paid by the company in the last three quarters. Fattal noted that they continue to conduct additional negotiations regarding waiver or deferral of rent for the current quarter, as well as regarding rent for 2021.

As for the London hotel deal, it has been agreed that Fattal will inject initial capital of £ 45 million into the property company’s coffers to partially repay the loans which currently stand at around £ 608 million, and the owners will inject around £ 18 million. To reduce the rent by a total of £ 52 million over the next 3 years. The property company in which Fattal entered as a partner owns Leonardo Royal Hotel London City, Leonardo Royal Hotel St. Paul’s, Leonardo Royal Hotel Tower Bridge and NYX Hotel London Holborn. Just last year the four hotels were renovated at a cost of £ 35 million.

In addition, according to the agreements, if the property company is sold to a third party, an amount of around £ 550 million will be transferred to the financial entities that financed the purchase, around £ 44 million will be transferred to the owner and an amount of around £ 45 million invested Fattal will be returned to her. The balance of the proceeds from the sale will be divided among the shareholders in the property company according to an agreed mechanism. A binding legal agreement has not yet been signed between the parties to anchor the agreements.

The Fattal chain, owned (62.34%) by the Fattal family, was established by David Fattal in 1999 and specializes in the maintenance, operation, rental and management of hotels in Israel and Europe, as well as the purchase and construction of new hotels. The chain currently has more than 42,000 rooms in 217 hotels (including hotels under construction). The chain’s activity in Europe includes 169 hotels (including hotels under construction), with the largest concentration being in Germany and the United Kingdom (including Ireland).

“Following the Corona crisis, we have been working hard in recent months to reduce the current expenses of the Fattal chain, including the rent we pay,” he said. Message from David Fattal, Chairman of the Board and CEO of the company. “The Fattal hotel chain will continue to act responsibly towards the company, its employees and shareholders and will continue to negotiate rent for 2021.”