International Hotel Investments plc (IHI), the publicly traded equity owning the Corinthia brand, recently published its 2025 annual report. Although the financial statements show a meaningful improvement in the bottom line, mainly on account of a number of improved valuations of various properties within their portfolio, the more interesting details emerge from the statements made by chairman Alfred Pisani and CEO Simon Naudi in the annual report.
After several years in which the group was mainly focused on absorbing the negative impact of the pandemic and the war in Ukraine, together with the execution of an ambitious development pipeline, IHI is now clearly articulating what could be described as a three-pronged strategy encompassing: i) a capital recycling programme through targeted divestments and selective reinvestment; ii) a renewed focus on operational efficiency across both the hotels that are owned, but, also importantly, those being managed for other investors; and iii) the continued growth of the Corinthia brand with an increased weighting towards third-party managed properties. These are all fundamentally important pillars for the future of the group to derive improving and consistent returns for shareholders.
The main highlights of the financial performance show an increase in revenue of 9.3% to €335.3 million, with EBITDA broadly unchanged at €61.9 million. Profit after tax attributable to IHI shareholders rose to €20.8 million from €4.4 million the previous year, mainly arising from net fair value uplifts of €18.4 million. An interim dividend of €0.03 per share was declared following the disposal of a majority stake of the Lisbon property.
Capital recycling strategy
One of the annual report’s most important strategic statements relates to IHI’s intention to actively manage its real estate portfolio by selling mature assets, using the proceeds to reduce leverage, reward shareholders via cash dividends, and reinvest in projects that offer superior risk-adjusted returns.
This reflects a continuation of the recently-concluded disposal of a 72% stake in Corinthia Hotel Lisbon. The transaction valued the property at €150 million, which was above the €119 million carrying value that appeared in the financial statements until recently. IHI retained a 28% stake, while Corinthia Hotels Limited (CHL) continues to operate the property under a 20-year management agreement.
In essence, IHI crystallised the valuation uplift over the years, locked in a long-term management contract and concurrently got access to capital that is being applied to reduce the overall indebtedness, finance the payment of a dividend and also target new initiatives.
The chairman indicated that the Prague property (with an asset value of €110 million as at the end of 2025) is the next candidate for divestment, with the objective of concluding a transaction by early 2027.
The economic rationale is rather simple to explain, in that properties that have seemingly reached the maturity phase of their value creation cycle would tend to generate higher sale proceeds than ongoing rental or operating cash flows can justify on a discounted basis.
Moreover, international investor demand for European hotel real estate assets is robust, which provides more support to the focus on planned property disposals.
In terms of selected reinvestment opportunities, in recent weeks, IHI acquired 25% of Mediterranean Investments Holding plc (MIH) from Kuwait’s National Investment Holding Ltd for €37 million, with CPHCL acquiring an equivalent stake. The purchase price equates to a 33% discount to the net asset value of MIH, which can be considered as a highly attractive entry for IHI, also on the basis of the strong profitability of the company owning Palm City Residences in Libya, coupled with the company’s low level of leverage.
In Malta, the Corinthia Oasis project in close proximity to the Golden Sands resort secured its development permit from the Planning Authority, thereby opening the path to what could be an important luxury residential and hotel development not only for IHI but also for the country in terms of having suitable properties catering for high-end visitors to Malta. CEO Simon Naudi said in the annual report that IHI “is now seeking the best possible financial structures for this unique development to proceed to construction”.
“Third-party hotel owners are increasingly entrusting their properties to CHL under management agreements. This linkage is important given the strategic shift towards a more asset-light operating model”
Operational efficiency: the second pillar
The second leg of the strategy is equally fundamental. In a recent meeting with financial analysts, the chairman was vocal about driving efficiency, cost-effectiveness and productivity across the group.
This is essential not only for the financial performance of the group’s owned properties but also to maintain the trust of third-party hotel owners who are increasingly entrusting their properties to CHL under management agreements. This linkage is important given the strategic shift towards a more asset-light operating model.
Essentially, Corinthia’s credibility with third-party owners depends on its ability to deliver strong operating performance from the hotels within its growing portfolio.
Brand growth and the asset-light model
The third leg of the strategy is the most ambitious and arguably the most important for the group’s long-term value. The Corinthia brand, which until recently was mainly centred around a small number of owned properties in Malta, London, Lisbon, Budapest, Tripoli, St Petersburg and Prague, has now grown to encompass a number of other properties under management agreements signed with third-party owners who have chosen to have the Corinthia brand for their property and CHL to manage it.
Hotels in New York, Bucharest, Brussels and Rome have all been added to the portfolio in recent months. Also, new management or lease agreements have already been signed for properties (at various stages of design or construction) in, China Dubai, Doha, the Maldives, Turks and Caicos, Riyadh in Saudi Arabia, and Lake Como, Puglia, and Tuscany in Italy.
The hotels in Riyadh, Doha, and the Maldives are due to open in 2027, with a further two (Lake Como and Puglia) in 2028, Turks and Caicos in 2029 and the rest in 2030 and beyond. The contribution from each of these properties will, therefore, take time to filter through the IHI Group’s operating performance.
The annual report also noted that an agreement was concluded with the authorities in Benghazi to develop and manage four hotels in the Libyan city, including a Corinthia-branded operation.
IHI is now imminently expected to disclose its refinancing plans for the two bonds maturing in July and December 2026, amounting to €115 million, and publish its 2026 guidance in the financial analysis summary by the end of June. It would be interesting to analyse the projected operational performance for 2026 in the light of the pre-opening and ramp-up costs in 2025 amounting to €12.7 million in Brussels and Rome.
Following the successful sale of the property in Lisbon and the planned disposal of its Prague hotel next year, IHI is now evidently in a much stronger position to give due consideration to important upcoming investments and strategic choices for Malta while essentially executing on its targeted strategy.
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