TRG Property Sales

ARC Ratings reaffirms “investment grade” status to The Resort Group PLC

ARC Ratings, S.A. (ARC Ratings) has re-affirmed the final public “BBB-” issuer medium and long-term rating, with a stable outlook, to The Resort Group PLC (“TRG”), based on the expected capacity of the Group to develop its activity, taking advantage of Cape Verde as a secure, political and socially stable emerging touristic market, and to generate funds with an increasing contribution from leisure and hospitality revenues.

 

The Resort Group Profile

Established in Gibraltar a decade ago, TRG develops, manages and operates touristic hotels and resorts and currently has three in operation in Cape Verde (with over 2,200 accommodation units in Sal Island). The Group has a further seven touristic hotels and resorts in various stages of planning and development (six of which are situated on Boa Vista Island) totalling over 3,200 accommodation units.

 

Rating Rationale

The Resort Group’s key rating drivers are the following:

Strong business model – TRG has implemented a business model with several partners that allows the Group to reduce its risks, sharing part of potential profitability with its partners: accommodation unit investors; construction contractor; Hotels and Resort operators and international tour operators.

Strong international hotel brands – TRG has been able to attract strong international hotel brand operators to its hotels and resorts, including the Meliá, Sensimar (TUI Group), Hilton Worldwide and Steigenberger brands.

Guaranteed occupancy by an international tour operator – TRG has obtained minimum occupancy agreements with TUI Group for at least the first three years of operation with a potential two-year extension.

Experienced management board – TRG is controlled by an experienced management board.

Moderate leverage – The Group’s financing model, mainly through the pre-sale of accommodation units and through a diversified sales structure, has allowed it to develop its resorts with moderate leverage. At the end of August 2017, the net loan to assets ratio, considering the market value at the end of 2016 of the assets retained and the three hotels and resorts under development, was 21.4%.

 

For more information, get in touch with a member of the team on our contact page.

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