Monday, January 01, 2007

Portfolio of 47 Net Leased Marriott Hotels in UK Sold for £1.1 Billion

The Telegraph - January 1, 2007

Royal Bank of Scotland has struck a £1.1bn deal to sell 47 Marriott hotels across the UK – including the landmark County Hall hotel in London – to a subsidiary of Israel's Delek Real Estate and a selection of partners. RBS had bought 46 of the hotels from a joint venture between Whitbread and Marriott International last April for £951m, paying an additional £30m for a separate Marriott development.

Delek Belron Real Estate is taking a 17pc stake in the hotels while another Israeli investor, Electra Real Estate, will buy a 9.9pc stake. Other partners include FIBI Investment – the main Israeli investment arm of FIBI Holdings which has a controlling interest in Israel's fourth-largest bank – and Dublin-based Quinlan Private. Israeli Yigal Ahuvi, who has made a fortune in British real estate, is also thought to be involved. The investors will provide £203m of equity and have secured a long-term loan of £856m from the Royal Bank of Scotland to fund the acquisition.

The bank will be entitled to 20pc of the profits from any future sale of the hotels excluding an annual 2.5pc increase in their value and regular revenues from operations. The purchasers will get additional funding of around £62m for future investments in the hotels.

The portfolio, which also includes the London Regent's Park hotel, has a total of 8,456 rooms. It will be managed by Marriott under a 30-year agreement, which can be extended by another 10 years. The company estimates that the hotels' income after expenses will be around £78m a year for the next 10 years. The deal is due to be completed on March 30. Sphere: Related Content

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