Upload
haminh
View
215
Download
0
Embed Size (px)
Citation preview
CBRE | Page 1
Agenda
1. Valuation Approach
2. Practical Examples Using Each Method
3. Overview of the Hotel Market
CBRE | Page 3
Principal Methods
Income Capitalisation1
Discounted Cash Flow (DCF)2
Market Comparison – Comparable Method 3
Three primary methods of hotel valuation:
CBRE | Page 4
Income Capitalisation
� Review of historic, current and budget trading
� Project forward 1, 3 or 5 years to stabilised year /fair
maintainable level
� Capitalise stabilised EBITDA adopting an appropriate yield
� Deduct aggregate profit shortfalls from capital value
� Deduct CAPEX amount and purchaser’s costs (4.46%)
CBRE | Page 5
Discounted Cash Flow
� Review historic, current and budget trading figures
� Run 10 year projections
� Projected EBITDA over 10 years is discounted to present
day values
� Capitalised EBITDA in year 10 is also discounted to
present day values
� Factor future CAPEX into cashflow (if appropriate)
� Deduct purchaser’s costs
CBRE | Page 6
Comparable Method
� Analyse recent sales on a price per bedroom basis
� Apply to hotel being valued
� Ensure both hotels are comparable
� Check method only – not primary valuation method
� Be careful – results can be very misleading
CBRE | Page 11
Historic TradingMade-Up Hotel Historic Trading
Year End December December December December December December
Year 2008 2009 2010 2011 2012 2013
Actual Actual Actual Actual Actual Forecast
No of Rooms 150 150 150 150 150 150
Occupancy 68.5% 58.4% 71.2% 74.9% 75.8% 76.7%
ADR €176.00 €155.00 €134.00 €151.00 €153.00 €155.00
RevPAR €120.55 €90.59 €95.45 €113.08 €115.97 €118.90
TOTAL REVENUE €9,700,000 €7,100,000 €7,465,000 €8,400,000 €8,700,000 €9,000,000
TOTAL DEPARTMENTAL EXPENSES €4,656,000 €3,430,720 €3,511,536 €4,069,800 €4,153,380 €4,230,000
% of Total Revenue 48.00% 48.32% 47.04% 48.45% 47.74% 47.00%
TOTAL DEPARTMENTAL PROFIT €5,044,000 €3,669,280 €3,953,464 €4,330,200 €4,546,620 €4,770,000
% of Total Revenue 52.0% 51.7% 53.0% 51.6% 52.3% 53.0%
TOTAL UNDISTRIBUTED EXPENSES €2,386,200 €1,731,690 €1,822,207 €1,940,400 €2,018,400 €2,088,000
% of Total Revenue 24.6% 24.4% 24.4% 23.1% 23.2% 23.2%
GROSS OPERATING PROFIT €2,657,800 €1,937,590 €2,131,258 €2,389,800 €2,528,220 €2,682,000
27.4% 27.3% 28.6% 28.5% 29.1% 29.8%
NET OPERATING PROFIT / EBITDA €1,891,500 €1,278,000 €1 ,474,338 €1,735,440 €1,861,800 €2,115,000
% of Total Revenue 19.50% 18.00% 19.75% 20.66% 21.40% 23.50%
CBRE | Page 12
ProjectionsMade-Up Hotel Cash Flow Projections
Year End September September September
Projections (Present Values)
1 2 3
Year 2014 2015 2016
Projected Projected Projected
No of Rooms 150 150 150
Rooms Available 54,750 54,750 54,750
Rooms Sold 41,500 41,700 42,200
Occupancy 75.80% 76.16% 77.08%
ADR €155.00 €156.00 €158.00
RevPAR €117.49 €118.82 €121.78
Rooms €6,432,500 €6,505,200 €6,667,600
Total Revenue €9,009,104 €9,162,254 €9,390,986
TOTAL DEPARTMENTAL EXPENSES €4,144,638 €4,173,865 €4,278,064
% of Total Revenue 46.00% 45.56% 45.56%
TOTAL DEPARTMENTAL PROFIT €4,864,466 €4,988,389 €5,112,922
% of Total Revenue 54.0% 54.4% 54.4%
TOTAL UNDISTRIBUTED EXPENSES €1,982,003 €1,992,790 €2,019,062
% of Total Revenue 22.0% 21.7% 21.5%
GROSS OPERATING PROFIT €2,882,463 €2,995,599 €3,093,860
32.0% 32.7% 32.9%
NET OPERATING PROFIT /EBITDA €2,257,231 €2,370,733 €2, 469,360
% of Total Revenue 25.05% 25.87% 26.30%
CBRE | Page 13
Income Capitalisation Example
2008 (Actual) €9.70m €1.89m
2009 (Actual) €7.10m €1.28m
2010 (Actual) €7.47m €1.47m
2011 (Actual) €8.40m €1.74m
2012 (Actual) €8.70m €1.86m
2013 (Forecast) €9.00m €2.16m
2014 (Projection) €9.00m €2.25
2015 (Projection) €9.16m €2.37m
2016 (Projection) €9.39m €2.47m
FOUR STAR, 150 BEDROOM DUBLIN CITY CENTRE HOTEL
(MILLION) TURNOVER EBITDA
CBRE | Page 14
€0.10 m- =
Income CapitalisationCalculating Shortfall
€0.22 m
TotalShortfall
€0.32m
- =
CBRE | Page 15
Valuation
Stabilised EBITDA €2.47m
Yield 8%
YP (multiple) 12.5
Gross Value €30.875m
Less Shortfall €0.32m
Less Capex €0m
Gross Value €30.55m
Less costs (4.46%) €29.25m
Value per Bedroom €195,000
INCOME CAPITALISATION
CBRE | Page 16
Discounted Cash Flow
Year 1 2 3 4 5 6 7 8 9 10Sale in Year 10
September 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Total Revenue €9,009 €9,345 €9,770 €9,966 €10,165 €10,368 €10,576 €10,787 €11,003 €11,223
€ ‘000’s
EBITDA €2,257 €2,418 €2,569 €2,620 €2,673 €2,726 €2,781 €2,837 €2,893 €2,951 €36,889CAPEX €0 €0 €0 €0 €0 €0 €0 €0 €0 0
Cash Flow after CapEx €2,257 €2,418 €2,569 €2,620 €2,673 €2,726 €2,781 €2,837 €2,893 €2,951
Running Yield 7.45% 7.98% 8.48% 8.65% 8.82% 9.00% 9.18% 9.36% 9.55% 9.74%
Valuation (DCF)
Exit Yield 8.00%
Discount Rate 10.00%Value
pre-CapEx Analysis NPV Gross Value €30,307 Net value €28,955
CapEx if not in Cash Flow €0 Number of rooms 150
€30,307 Net value per room €193,033
Costs 4.46% IRR 9.88%
NET VALUE €28,955Net Initial Yield 7.45%
Value per bedroom €193,033
CBRE | Page 18
Market Yields
LOCATION YIELD MULTIPLE Dublin Prime 7.00% - 8.00% 12.5 – 14.3
Dublin Secondary 8.00% - 9.50% 10.5 – 12.5
Other Cities/Major Towns Prime 8.50% - 11.50% 8.7 - 11.7
Other Cities/Major Towns Secondary
9.50% - 13.0% 7.7 - 10.5
Provincial Town 11.0% - 15.0% 6.66 – 9.0
Other 12.0% - 16.0% 6.25 - 8.3
CBRE | Page 21
Investment In Hotels Ireland 2013 (To Q3)€106m in 20 transactions in first nine months of 20 13
Source | CBRE Research
CBRE | Page 22
Recent Key Hotel Sales 2012/2013
DUBLIN 4501 bedrooms €67million€133,733 per room
DUBLIN 1138 bedrooms€22 million€159,420 per room
DUBLIN 2195 bedrooms€35 million approx.€179,487 per room
Co. Mayo83 bedrooms€20 million approx.€240,964 per room
CORK150 bedrooms€5.0 million approx.€33,333 per room
Cork131 bedrooms€21 million€160,305 per room
Kildare 36 bedrooms & 33 Lodges€2.5 million€36,231
Wicklow51 bedroomsExcess €1 million.
CBRE | Page 23
Hotels Currently on the Market
Wexford60 BedroomsGuide: €950,000€15,833 per bedroom
Dublin 181 bedroomsGuide €30 million
Limerick151 bedroomsGuide: €3.0 million €19,868 per room
Limerick154Guide: €4.0 million€25,974 per room
Kildare52 bedrooms32 Apts, 15 cottages Guide: €4-5 million