Mexico-based hotel chain Hoteles City Express has signed a binding agreement with Deutsche Bank Mexico, Multiple Banking Institution, Fiduciary Division F / 1616 or ‘Fibra Inn’ to acquire the City Express Chihuahua hotel.

Under the terms of the agreement, Hoteles City Express has agreed to acquire City Express Chihuahua hotel for MXN95m ($4.9m) plus VAT.

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This price represents a cap rate of 9.4% considering an NOI of MXN$8.9m ($467,298) generated by the hotel from May 2018 to April 2019 according to the information provided by Fibra Inn and on which a due diligence process was carried out.

Upon completion of the deal, the new hotel will become part of the wholly owned hotel inventory of Hoteles City Express and of Fibra STAY.

The hotel will be operated by Operadora de Hoteles City Express with a focus on optimising the hotel performance over the next one year.

Hoteles City Express anticipates that the acquisition of the City Express Chihuahua hotel would further strengthen the competitive position of its proprietary hotel inventory in the northwest region of the country.

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According to the company, Mexico presented high single-digit growth in revenues over the past one year due to new investments boosted by the Free Trade Agreement between Mexico, the US and Canada.

The acquisition of the hotel, which is subject of the binding agreement, will be executed over the next 62 days period.

Hoteles City Express has 152 hotels in operation located throughout Mexico, Costa Rica, Colombia and Chile and operates five distinct brands.