IHI holds AGM, shareholder commitments met

International Hotel Investments plc (IHI) - Malta's leading public hotel company - has met its first major commitment to shareholders by acquiring a further two five-star properties in Europe during 2001 giving the company a portfolio of four luxury hotels in prime locations.

Alfred Pisani, IHI Chairman and Chief Executive, told shareholders at the company's second Annual General Meeting last Friday that the acquisition of landmark properties in Lisbon, Portugal, and St Petersburg in Russia - in addition to the Company's existing properties in Malta, the Corinthia San Gorg, and in Hungary, the Corinthia Grand Hotel Royal - had firmly positioned IHI among the principal European hotel investors. The company now aims to enhance this high profile by further redeveloping and upgrading the newly acquired properties.

IHI is a publicly quoted company set up in 2000 with the objective to raise funds to invest in hotels, primarily in economies where long-term growth in real estate values and tourism are expected to run at higher averages. The Company started its activity through the ownership of the five-star Corinthia San Gorg Hotel in Malta, and has, since inception, also been rebuilding the famous Grand Hotel Royal, a landmark property in the heart of Budapest, Hungary. The latter property features a 19th century ballroom and a grand traditional spa, besides major facilities including 414 executive rooms, full conference facilities for over 1,000 persons, 26 luxury apartments, a multi-storey car park and extensive food and beverage outlets. The hotel is now expected to re-open for business in October this year, aiming to establish itself as the leading hotel in Hungary.

Since last year's AGM, the Company has acquired the high-rise Alfa Hotel in the business centre of Lisbon, which will now be refurbished and extended to increase its facilities, as well as the number of bedrooms up to 530, that is 1,060 beds. Later in the year, IHI also acquired the 288-room five-star Nevskij Palace Hotel on the main boulevard of St Petersburg. This property was acquired along with four other unutilised properties abutting the hotel. These adjacent properties will now be redeveloped to incorporate a 9,000m2 shopping centre, 230 additional bedrooms, raising the bed capacity to 1,040 beds, executive facilities for business travellers, a 1,000-person convention centre and other leisure facilities.

IHI is owned as to 75 per cent by the Corinthia Group, Malta's largest private hotel company, with the remaining equity held by some 3,500 private shareholders and institutional investors. IHI had also acquired on its inception, 20% shareholding stakes in each of C.H.I. Limited, the Corinthia Group's hotel management company, and Quality Project Management Limited, the Group's construction and project management arm. These strategic holdings have added a unique advantage to IHI in competition to other hotel investors worldwide, providing an integrated knowledge of the hotel management and development business.

Funds totalling EUR287 million raised from shareholders and banks by way of equity, bonds and loans both in 2000 and 2001, are being fully utilised to reconstruct the hotel in Budapest and the acquisition and upgrading of the hotels in Malta, Lisbon and St Petersburg. Mr Pisani told shareholders that the value of these properties once the projects in Budapest, Lisbon and St Petersburg are completed will hit

The EUR450 million mark, realising substantial capital gains over the original acquisition and development costs. Once banks loans taken to fund these projects are being repaid, the hotels will generate attractive returns in the interest of shareholders.

Throughout 2001, IHI registered a turnover of Euros 13,668,000 on which a net profit after taxation of Euros 1,110,849 was registered inclusive of a profit on the sale of an investment amounting to Euros 2,277,941. These figures reflect the company's first full year of operation, in which revenues were generated primarily by the hotel in Malta. Mr Pisani also told shareholders that the Company is now considering options for its second phase of development, aiming to raise additional equity and bank loans with the intention to target new acquisitions in Europe, Russia, Asia and Africa.