Page 33 - Stakis A Case Study

development as being £2 million in value and were
prepared to retain the properties or sell them on to

institutional investors.

The Group's involvement in the property sector was

deepened by the acquisition of the freehold and long

leasehold interests in hotels which it already operated and

occupied on a leasehold basis. The eight hotels in question

were owned by Norwich Union Insurance Group, seven of

them freehold and one on a ground lease. The price paid to

acquire the entire Norwich Union interests was set at £14.5

million and was met by the issue of 12.5 million shares.
Added to their existing holding it meant that Norwich Union

held 5.43 per cent of the equity of the company, a similar

holding to that of Scottish and Newcastle Breweries. This

particular deal was prompted by the rise in rents on hotels.

The total amount payable had increased by more than £1

million over the previous two financial years and would

have amounted to another £1.45 million in the year to

October 1988.

When Chisman arrived he stated that he “did not see the

company becoming a property developer in its own right,
more of a third party developer.” The property division was

also seen to be useful for providing expertise for other

divisions - at that time it was looking at a number of

potential hotel sites and 20 possible nursing homes sites.