Wellcome Trust books into Tune Hotels franchise and plans expansion

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The Wellcome Trust has acquired a 50% stake in Raag Hotels, which operates Tune Hotels in central London, and plans to more than double its presence in the capital.

The Wellcome Trust has acquired the stake from Mountgrange Real Estate Opportunity Fund. The remaining 50% is owned by the Jivrag family and a company owned by Naguib Kheraj.

The net yield of the operating assets is 6.5%.

Together the shareholders have now 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 1,500 rooms.

Following the deal Raag Hotels has acquired a new 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 the Jivraj family, Naguib Kheraj and Mountgrange, to develop a portfolio of Tune Hotels in London. 

Tune Hotels currently operate in Westminster, Liverpool Street, Paddington and King’s Cross, and are managed by the Jivrag family’s Queensway Hotels. 

Bank finance for the development of the Raag Hotels business has been provided by HSBC and The Royal Bank of Scotland.

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.”

Manish Chande, senior partner of Mountgrange, said: “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.”


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