A multi-million pound deal has been sold to Henderson Park, a chain real estate group at the Hilton Hotel in the UK, to show signs of recovery in the travel sector and the market for city housing.
The Hilton portfolio of 12 hotels and more than 2,400 rooms include properties in London, Edinburgh, Dublin, Bristol and Coventry. It was valued at 5 555 million, according to people familiar with the terms.
The agreement was financed by a loan from the credit arm of the private equity group Apollo Global Management.
Henderson Park said they plan to invest an additional 40 million m to expand the hotels and improve their facilities. The Edinburgh Hotel is allowed to plan to build two more floors, for example, adding 31 rooms.
“We see that a big recovery is coming and so our bets on the Hilton portfolio are on extraordinary assets,” said Nick Weber, a founding partner at Henderson Park.
“You have Icelington and Chelsea, you have Edinburgh … and we think we’re buying it at a very attractive price. It’s not a double-edged sword price. We believe we’re playing with the recovery we’re seeing in our other assets,” he added.
Despite the fact that travel was almost completely shut down during successive lockdowns, the hotel sector is much less vulnerable than many analysts and investors expected at the onset of the epidemic.
Owners, backed by flexible banks and government support schemes, have retained assets in hopes of getting a better return on their investment as well as travel recovery.
Hilton’s properties were sold by a public company through a selected process with only three or four potential buyers, who have the knowledge to negotiate.
The deal is in line with previous hotel transactions in Henderson Park, including the purchase of the 440-room Westin Hotel in Paris and the two largest hotels in the UK ল London and Birmingham Hilton Metropolis.
More than one-fifth of Henderson Park’s portfolio is hotels, including office blocks and industrial sites. It has invested 11 11 billion in real estate assets since it was founded in 2016.
The Wenders in Henderson Park reported that the London Metropolis had an average of 49 per cent of 1,100 rooms in September and more on the weekends. He added that bookings for meetings and events in 2022 were at the same level as they were in 2020 for September 2020.
According to industry data provider STR, the average UK hotel occupancy reached 21.9 per cent in April 2020, but rose to 71 per cent in August due to domestic holiday demand.
Hotels in central London, which rely on international visitors, had an average occupancy of 56 per cent in August due to the UK’s strict travel ban, which has only just begun to ease last month.
Joe Green, co-head of hotel brokerage at real estate firm CBRE, said the lack of a financial crisis in the sector, with confidence in the hotel recovery, suggests that property prices were high.
“Lots of money has been raised by investors for hospitality deals and when a lot of money is raised and not much is supplied which is good for the price.”
Despite warnings that the video conferencing sector will be affected, Green added: “There is an expectation among investors that travel will return as before and people will have to travel for work.”