Real estate group plummets for Hilton hotels in sign of recovery

A chain of Hilton hotels in the United Kingdom was sold in a multi-million dollar deal to Henderson Park real estate group, in a sign of the recovery in the travel sector and the accommodation market in the city.

Hilton’s portfolio of 12 hotels and more than 2,400 rooms includes properties in London, Edinburgh, Dublin, Bristol and Coventry. It was valued at 555 million pounds, according to people with knowledge of the terms.

The deal was financed with debt from the credit arm of private equity group Apollo Global Management.

Henderson Park said it planned to invest another £ 40 million in expanding the hotels and upgrading their facilities. You have planning permission to build another two floors at the Edinburgh hotel, for example, adding 31 rooms.

“We see a massive recovery in this, so our stake in the Hilton portfolio is on phenomenal assets,” said Nick Weber, founding partner of Henderson Park.

“You have Islington and Chelsea, you have Edinburgh. . . and we feel that we are buying it at a very attractive price. It is not a discounted price. We believe that we are playing with the recovery that we are seeing in our other assets ”, he added.

Previous Henderson Park hotel transactions include the purchase of the 440-room Westin hotel in Paris © Alamy

Despite the near-total closure of travel during successive closed closings, there have been far fewer insolvencies in the hotel sector than many analysts and investors expected at the start of the pandemic.

Homeowners, backed by lenient banks and government support schemes, have held onto properties in hopes of achieving better returns on their investment as travel picks up.

The Hilton properties were sold by a public company through a select process that involved only three or four potential buyers, those with knowledge of the negotiations said.

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 account for just over a fifth of Henderson Park’s portfolio, which also includes office blocks and industrial sites. It has invested $ 11 billion in real estate assets since its founding in 2016.

Occupancy at the 1,100-room London Metropole averaged 49 percent in September and had been higher on weekends, Henderson Park’s Weber said. Bookings for meetings and events in 2022 were at the same level as for 2020 in September 2019, it added.

Average UK hotel occupancy hit a low of 21.9 percent in April 2020, according to industry data provider STR, but rebounded to 71 percent in August driven by national holiday demand.

Hotels in central London that rely on international visitors have lagged behind, averaging 56 percent occupancy in August due to strict UK travel restrictions, which have only just begun. to ease in the last month.

Joe Green, co-head of hotel brokerage at real estate firm CBRE, said the lack of financial difficulties in the sector, coupled with confidence in the recovery of hotels, meant that property prices had remained high.

“Investors have raised a lot of money for hospitality deals, and when there’s a lot of money raised and little supply, that’s good for pricing.”

Despite warnings that video conferencing would affect the industry, Green added: “There is an expectation among investors that travel will return to being close to what it was previously and that people will have to travel for work.”

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