Raag Hotels Limited, which has a strategic franchise partnership to operate international value hotel brand Tune Hotels in Central London, announces the formation of a new Joint Venture with the Wellcome Trust and the acquisition of a site for a new Tune Hotel in Canary Wharf.The Wellcome Trust has acquired a 50% shareholding in Raag Hotels alongside the remaining shareholders, a company associated with the Jivraj Family and a company owned by Naguib Kheraj. The shareholders have committed additional equity to fund the future roll out of more Tune Hotels in London, taking the portfolio from the current 616 rooms to a target of 1500 rooms.
Having provided the majority of the capital to back the initial start-up and successful development of the business over the past three years, Mountgrange Real Estate Opportunity Fund is realising its investment in full as part of the transaction.
Raag Hotels has also acquired a site in Canary Wharf which has planning consent for the development of a 130 room hotel. The Tune Hotel Canary Wharf is expected to open in early 2015.
Raag Hotels was set up in 2010 as a joint venture between interests associated with the Jivraj Family, Naguib Kheraj and Mountgrange, to develop a portfolio of Tune Hotels in London. Tune Hotels are operating in key business and leisure locations in Westminster, Liverpool Street, Paddington and Kings Cross. Under the management of Queensway Hotels, part of the Jivraj family interests, the Tune Hotels brand has established a fast growing presence in the London market, providing high quality accommodation at affordable prices. Customer response to this innovative concept has been very positive resulting in very strong occupancy levels. The hotels have won wide recognition including the Sunday Times Magazine award for London Budget Hotel of the year in 2012.
Bank finance for the development of the Raag Hotels business has been provided by HSBC and RBS.
Naushad Jivraj, CEO of Queensway Hotels said:
“We are delighted to form this new joint venture with the Wellcome Trust, an institution which has a most distinguished track record and reputation as a long term investor. Mountgrange have been an excellent partner to work with and we are pleased that the confidence they showed in backing the start-up of this business has produced a successful outcome for their investors.”
Peter Pereira Gray, Managing Director of the Investment Division of the Wellcome Trust said:
“The Tune Hotels concept is innovative and provides consumers with an offering which is high quality and very good value for money. The business produces an attractive cashflow profile with the potential for long term capital appreciation. We see the opportunity to expand this business and add to its portfolio of well-located properties in London.”
Mark Lankester, CEO of Tune Hotels Group said:
“London has been a fabulous market for Tune Hotels and with this new investment by the Wellcome Trust in the Raag business, the wheels are in motion for the exciting times that we know lie ahead.”
Manish Chande, Senior Partner of Mountgrange commented:
“We are delighted with the performance of this venture and our operating partner Queensway Hotels. Having supported the early stage development of this business, now is the right time for a new investor to be part of the next stage of growth. We look forward to repeating the formula of applying our property expertise to other sectors in the future.”