New
kid on the block backed by Thai conglomerate DTGO methodically plots overseas
expansion.
INTERNATIONAL
REPORT – Singapore-listed ProsperCap, which owns 17 hotels with nearly 4,000
rooms in the U.K. under long-term franchise agreements with Hilton, IHG and
Marriott, is actively seeking to refinance its hotel portfolio as existing loan
terms mature at end of the year.
ProsperCap
sprouted from Thai conglomerate DTGO Corp.’s £450 million acquisition of the U.K.
assets from U.S. private equity fund Marathon Asset Management in late 2019.
This marked DTGO's first investment foray outside Thailand. The acquisition was
reportedly financed through a CMBS loan arranged by Goldman Sachs.
ProsperCap
CEO and Executive Director Iqbal Jumabhoy said the timing is good for
refinancing, while the company is also securing capital to refurbish and
possibly increase room counts and/or add new facilities at some of the hotels.
He declined to reveal the total CapEx required.
Jumabhoy’s
optimism might be based on the fact that The Bank of England on August 1 cut
interest rates for the first time since March 2020 to 5% after inflation
reverted to its 2% target in May and held steady in June. Nevertheless, caution
about cutting rates too quickly persists, with policymakers divided if
inflation had eased sufficiently, Reuters reported.

AC Hotel by Marriott in Birmingham, one of 17 hotels owned by ProsperCap
ProsperCap's
portfolio has also fully recovery from the pandemic, buoying optimism for
better debt. The 17 assets generated £145 million revenue in FY23, 12.5%
increase over FY22. Just-released first-half results saw revenue rising 3.5% over
1H23 to £67.9 million. This excluded the effects of a fire incident at one of its hotels,
Crowne Plaza Stratford-upon-Avon, in April that affected room availability in
May and June.
ADR
rose 3.1% to £99.90 and RevPAR increased 1.3% to £76.41.
The
company has yet to make a profit but pointed out that its normalized loss
(excluding one-off income and expenses) of £3.9 million before tax for 1H24 was
a 66.9% improvement over the loss of £11.9 million in 1H23.
As
of June 2024, its net debt was £291 million, down from £318 million at
end-2023. Net debt/total equity was 1.8, versus 2.54 at end-2023.
Next
priority
Having
put the pandemic behind it and laid out CapEx plans, ProsperCap appears to be
kickstarting its growth plans, as seen in its listing in January this year on
Singapore Exchange Catalist, a trading board that caters to young companies
with growth potential. The aim is to raise awareness of the firm in the capital
markets, which would enable it to seek funds for future growth, Jumabhoy said.
Following
the listing, DTGO controls 85% of ProsperCap, and the rest public and other
shareholders. Jumabhoy was recruited in 2023 to assist with the listing and
lead the company to its next phase of growth.
In
Thailand, DTGO’s diverse businesses include property developer Magnolia Quality
Development Corp., although projects are mostly residential. Its notable hotel
assets are the Waldorf Astoria in Bangkok and an upcoming Six Senses The
Forestias, also in the capital city.
DTGO
was founded in 1993 by Thippaporn Ahriyavraromp, daughter of Thai business
tycoon Dhanin Chearavanont of the CP Group.
While
hotel asset class is a fraction of its business back home, DTGO appears to have
big ambitions abroad via the ProsperCap vehicle. When asked about growth
prospects, Jumabhoy said, “The idea is to use the capital markets to create an
investment management platform, initially in the hotel space but possibly in
other allied hospitality spaces such as serviced apartments.”

Having a set-up in the U.K. means the U.K. and Western Europe are a logical growth prospect. The Benelux countries would also be easy for us to bolt-on, but we’re not looking at anything there right now.
Iqbal Jumabhoy
ProsperCap’s
latest financial statement also shows an ambition to expand to other real
estate classes such as commercial and office, after an initial focus on
investing in hospitality, which may include acquiring existing assets with
operating agreements or partnerships with established operators or developers.
“My
goal is to stay close to what we’re doing at the moment [i.e., hotels],”
Jumabhoy said when asked about expansion to other all real estate classes.
On
plans to expand hotel investments, he said, “Having a set-up in the U.K. means
the U.K. and Western Europe are a logical growth prospect. The Benelux
countries would also be easy for us to bolt-on, but we’re not looking at
anything there right now.”
ProsperCap's
17 hotels are located in key U.K. regional cities, including Manchester,
Birmingham and Liverpool. They are managed by third-party operator Valor
Hospitality Europe while ProsperCap acts as asset manager.
Jumabhoy
said that the regional U.K. markets in general can yield higher than world city
London. “The
cap rates and yields in London are about 5%, whereas you can push that up to 7%
in the regional markets, which is quite a considerable jump,” he said.
The
dynamics of operating in London and regional cities are different, he added.
While London is international, a lot of the traffic in regional cities are
local leisure and business travel. “The local markets have grown steadily,
providing a steady demand,” he said, adding weddings, local functions, events,
conferences and spa/health clubs are among the key segments.
According
to Mordor Intelligence, the U.K. hospitality industry is expected to grow from
$57.4 billion in 2024 to $65 billion in 2029. In its 1H24 financial report,
ProsperCap said the market is seeing an increase in service apartments and
shared spaces, which makes the U.K. affordable for millennials and younger
generations. High disposable incomes locally and internationally have also
boosted demand for hotel rooms and other hospitality services.
But
there are challenges. A statutory wage increase of 9.8% from April 1, for
instance, raised payroll costs at hotels. Recent anti-immigration riots forced
ProsperCap to issue a statement on August 8 that hotels in the U.K. owned by
the group remain in full operation and no direct threats or disturbances had
been reported at the properties.
The
new kid on the block could however be a feather in DTGO’s cap to seek
prosperity beyond Thailand.