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January 26, 2017
5 of The Biggest Central London Hotels Sales In 2016
7 Pepys Street|| £300m|| 583 Rooms || 331,342 SF
The Doubletree Hilton is near the Tower of London, pictured above
In the largest single Hotel transaction of 2016, the Bhatia Family acquired Blackstone’s freehold on the Doubletree Hilton near the Tower of London for £300m. The 582-bedroom hotel achieved a sales price equivalent to £515,464 per key. The Bhatia Family, which also owns the 419-bed Hilton Paddington and 298-bed Hilton Waldorf, is headed by Gulshan Bhatia. The Livingstone brothers’ London & Regional and US REIT Host Hotels & Resorts are also rumoured to have been interested. The hotel was part of a portfolio of eight Mint Hotel properties bought by Blackstone for a reported £600m in 2011.
London & Birmingham || £550m-£600m || 1,869 Rooms || 850,000SF
London Hilton Metropole, one of two properties being sold by Tonstate
The Tonstate Group is selling the 1,059-room Hilton London Metropole and the 790-room Hilton Birmingham Metropole, which they bought from the Hilton Group for £417m in November 2006. The hotels were put up for sale in January last year, and the Livingstone Brothers’ London & Regional is expected to pay between £550m and £600m, although the transaction has not yet completed. The purchase price would represent a yield of around 4.5%, and a price per key of up to £324,500. Should the deal go ahead, it will become the largest central London hotel transaction of the past 12 months, and reflect a mark up of 43.9% on Tonstate’s original acquisition price.
Various Locations || £289,185,000 || 1,114 Rooms || 315,017 SF
Premier Inn Kings Cross Via premierinn.com
Whitbread PLC, the owner of Premier Inn, announced in April 2016 that it planned to carry out sale and leaseback transactions with proceeds of £100-£150m. It has since completed three deals on its London hotels, achieving a price per key of £259,592. In July 2016, it announced that it has exchanged agreements with Legal and General on its 389 room Hub by Premier Inn hotel in Kings Cross, which is due to open later this year. Legal & General will pay £84.5m for the property, with £46.5m upfront and the remainder paid at various stages of construction up to completion in June. Whitbread will pay an annual rent of £3.5m.
This month, Whitbread announced two further transactions. M&G investments have purchased the hub by Premier Inn in Tothill Street, Westminster, for £101,825,000 – of which £73.7m is to be paid on exchange. Completion is expected in October 2017, with a rent of £4.20m per annum. Aviva Investors has made an initial payment of £66.0m for the 326 room Premier in in West Smithfield, Farringdon, with the fee expected to rise to £102.86m on completion in December 2018. Rent on the West Smithfield property will be £4.24m. All these deals involve 25 year leases and reflect a net initial yield of around 4%.
Peninsula London Hotel (50% Stake)
1-5 Grosvenor Place || £107.5m || 190 Rooms || 199,550 SF
Computer Generated Image of the Peninsula London Hotel via grosvenor.com
Grosvenor accepted £107.5m cash to relinquish its 50% stake in the Peninsula London Hotel development on Hyde Park Corner at the end of 2016. The Hong Kong and Shanghai Hotels Ltd (HSH) will now assume 100% ownership of the project, which is expected to open in 2021. The 190-room hotel, along with 24-28 residential dwellings with a separate entrance on Halkin Street, will be arranged over lower ground, ground and eight upper floors and replace the 1950s and 1960s office buildings. Construction is expected to start this summer, and Grosvenor will act as landlord and retain the freehold interest.
The Arts Club
40 Dover Street|| £90,000,000 || 16 Rooms || 30,774 SF
40 Dover Street, via colliers.com
In January 2016, a consortium led by Gary Landesberg and Arjun Waney sold 40 Dover Street to a private investor for £90m. The 30,774 sqft property is let in its entirety to The Arts Club on a 35 year lease. The initial rent of £2.9m per annum reflects a net initial yield of 3.1%, with a guaranteed reversionary yield of 3.5% upon the rental increase to £3.3m pa in 2012. The self-contained members club is arranged over basement, ground, and five upper floors. In the basement is a nighclub, with restaurants and club space on the ground to second floors. There are 16 rooms spread across the third to fifth floors, and the transaction represents a capital value of £2925 per sq ft.