Home Commercial Property £192m deal struck for luxury London hotels

£192m deal struck for luxury London hotels

by Deleted Subscriber Content
11th Oct 11 8:59 am

Two top central London hotels are to be sold to a Middle Eastern investor for £192m, it has been announced.

Sanderson Hotel and St Martins Lane Hotel are set to be sold to Capital Hill Hotels Limited, an investment vehicle which holds a number of other hotel groups. The sale price of the five-star hotels equates to approximately £542,000 per room.

Morgans Hotel Group (MHG) announced that an agreement had been struck for the sale of the hotels, which it owns a 50 per cent stake in as part of a joint venture with an affiliate of Walton Street Capital. MHG’s share of the property was worth $10.1m (£6.5m) before interest, taxes, depreciation and amortization for the 12 months to end of June.

Both the Sanderson and St Martins Lane hotels will continue to be run by MHG under long-term management agreements. The terms of the agreements have been extended from 2027 to 2041 and include extension options.

The proceeds of the sales and cash in escrow will be used by the joint venture partners to retire about £99.5m of outstanding mortgage debt secured by the London hotels. MHG says it expects to have around $70m (£44.7m) in net proceeds after the closing costs and repayment of debt, which will then be used to invest in growth.

MHG chief executive officer Michael Gross said: “Our continued management of these two great London assets and the proceeds from the sale will help provide the foundation for continued growth of our management business and brands around the world. We are pleased that our team will be able to continue to build on the value and financial performance of Sanderson and St Martins Lane as well as the additional capital the new owner plans to invest to enhance these assets. We are very excited about the extension to our existing management agreements and we look forward to a long-term relationship with our new partner.”

The deal for the hotels is expected to go through in the fourth quarter of the year, depending on customary closing conditions being met. A £10m security deposit, which is non-refundable unless the joint venture defaults, has been paid to the joint venture partners.

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