Henderson Park Acquire 12-Strong UK Hilton Portfolio From Amaris Hospitality/LRC
Main Photo: Hilton Edinburgh Carlton
Date: October 2021
Name: Under three Hilton brands – Hilton Hotels & Resorts; Hilton Garden Inn; and DoubleTree by Hilton
Locations: London – Chelsea & Islington, Bristol North, Coventry, Dartford Bridge, Edinburgh – Central and Airport, Newbury, Southampton, Strathclyde – all UK and Dublin, Ireland
Number of Keys: 2,424
Seller: Amaris Hospitality, once owned by Lone Star, acquired by LRC Group in 2018. LRC added seven of the Hilton hotels to the portfolio in it’s acquisition of Amaris
Buyer: Henderson Park
A portfolio of Hilton hotels in the UK was sold to real estate company Henderson Park as part of a million pound deal as a sign of recovery in the travel and city accommodation markets. The hotels were originally a mix of Jurys Inn and other brands, that converted to Hilton, under ownership by Amaris Hospitality.
The 12 hotels and more than 2,400 rooms includes properties in London, Edinburgh, Dublin, Bristol and Coventry. It has been valued at £555 million, according to people with knowledge of the terms.
The transaction was financed with debt from the credit arm of private equity group Apollo Global Management.
Henderson Park said it plans to invest an additional £40 million to expand the hotels and improve their facilities. It has planning permission, for example to expand the Edinburgh Hotel by two more floors with 31 rooms. This was The Carlton, rebranded Hilton Edinburgh Carlton in April 2021, after a £17m refurb.
“We are seeing a massive rebound from that, so we have phenomenal assets in the Hilton portfolio,” said Nick Weber, founding partner of Henderson Park. “We have Islington and Chelsea in London, Edinburgh. . . and we believe we can buy it at a very attractive price. It’s not a distressed price. We believe we are contributing to the rebound we are seeing in our other assets” he added. Amaris put it’s DoubleTree by Hilton London Chelsea up for sale at £45m in April 2017.
Despite the near-complete shutdown of travel during consecutive lockdowns, there have been far fewer bankruptcies in the hotel sector than many analysts and investors expected at the start of the pandemic.
Owners, backed by lenient banks and government subsidy programs, have held their properties in hopes of getting better returns on their investments as tourism reboots.
The Hilton properties were sold by the publicly traded company in a select process that only involved three or four potential buyers.
The deal is in line with the value of Henderson Park’s previous hotel transactions, which include the purchase of the 440-room Westin Hotel in Paris and two of the UK’s largest hotels – the London and Birmingham Hilton Metropoles.
Hotels make up just over a fifth of Henderson Park’s portfolio, which also includes office buildings and industrial locations. It has invested $11 billion in real estate assets since it was founded in 2016.
“Occupancy in the metropolis of London with 1,100 rooms averaged 49 percent in September and was higher on the weekends” said Weber from Henderson Park. Bookings for meetings and events in 2022 were at the same level as for 2020 in September 2019, he added.
Average hotel occupancy in the UK hit a low of 21.9 percent in April 2020, according to industry data provider STR, but rebounded to 71 percent in August due to domestic vacation demand.
Hotels in central London that rely on international visitors lagged, with occupancy averaging 56 percent in August due to tough UK travel restrictions that were eased only last month.
Joe Green, co-head of hotel brokerage at real estate company CBRE, said property prices have remained high due to the lack of financial hardship in the industry coupled with confidence in the hotel’s recovery. “Investors have raised a lot of money on hospitality deals, and when a lot of money is raised and not a lot of supply, that’s good for pricing.”
Despite warnings that videoconferencing would hit the sector, Green added, “There is an expectation among investors that travel will come back close to where it was and that people will have to travel to work.”
Christophe Kuhbier, Managing Director at Henderson Park, added: “We believe these assets can deliver reliable cash flow, being located in key business and tourism hubs, and see an opportunity to drive growth through hands on management. We’ve worked closely with Hilton before and look forward to continuing our partnership and replicating our successes again.”
The transaction is expected to close later this year.
Price: Understood to be around £550m
Price per Key: If so £226,897
THPT Comment: Henderson Park has done a fab job from being a pan-European office and commercial real-estate into becoming a major hospitality company….what next? The company”s current portfolio is diversified across various sectors such as office, logistics, multifamily, student housing, hospitality and retail, including several real estate development projects.
First Seen: Financial Times and others
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