claim that the Barclay brothers had acted improperly in securing their controlling shareholding, and in the way they had taken control of the GBP660m loan against the hotel group. He has publicly vowed to fight further. December started with a call on existing shareholders to fund a rights issue of GBP150m, as part of a refinancing proposal advanced by majority shareholders the Barclays.
Their funds were
never in doubt; and despite media speculation that minority shareholder Paddy McKillen might struggle to deliver his part of the cash call, his portion of the funds was delivered, enabling him to maintain his 36% stake. In November,
McKillen
had proposed an alternative refinancing that would have done away with the need to fund the rights issue, replacing the total outstanding debt with fresh funds at a better rate, from a Qatari source. However, the Barclays, who control the board, turned down the proposition,
preferring
the rights issue that some commentators suggested was designed to catch McKillen out. The GBP547m loan was
arranged by Blackstone Real Estate Debt Strategies, and will repay a GBP660m bridging loan from Barclays Bank. The total was committed by a number of banks and other institutions, including Bank of America Merrill Lynch, Royal Bank of Canada, Wells Fargo Bank, RBC and Starwood Capital. “We are delighted to have completed a complex refinancing in challenging market conditions before year end,” said Stephen Alden, Maybourne CEO. “Our own team, the board, our advisors and the lending group have worked extremely hard – and in
close collaboration – to achieve this excellent result. It places us in an ideal position to realise our capital investment strategy and thus to maintain our leadership among the world’s finest hotels.” Bank of America is understood to have advanced around GBP200m of the total. The loan is the first time the bank has lent to the UK property sector since 2006, indicating that it now feels the market has stabilised. According to the Irish Times, McKillen still has EUR300m of personal debt and companies controlled by him owe a further EUR1.3bn. But he has committed to repay EUR400m in the next 12 months.
McKillen has also underlined his commitment to the London luxury hotels he worked to improve,
telling the Irish
Independent in December: “I’ve no interest in selling out in the short term. The proposed deal I have is for another 15 years. I intend to stay involved with them for a long time. There’s still a lot to be done.”
The Barclay brothers, meanwhile, were also under the media spotlight in December as a BBC investigative programme revealed their Ritz hotel in London has paid no corporate taxes
for the last 17
despite being profitable. The companies through which the hotel is managed have used legal measures to avoid UK company tax,
something that other
international brands including Amazon and Starbucks have recently been criticised for doing.
HA Perspective: January saw
this saga take another twist with McKillen launching a defamation suit against representatives of the Barclays, including Powerscourt Group and Maybourne Finance,
according to Irish press reports. How far this phase goes remains to be seen but what seems clear is that McKillen is determined to fight for as long as he can. What is also clear is the appetite for luxury hotels in gateway cities like London.
Despite recent
fears about over supply, the UK remains as attractive as ever to hotel investors. Even if there is a deterioration in trading in the short-term, it is doubtful that this appetite for the best quality assets will be diminished.
Starwood Capital moves on
luxury hotels Starwood Capital has sold four landmark French hotels in a deal worth an estimated EUR700m. The hotels, bought by Qatar Holding through its vehicle Constellation Hotels, are to be refurbished and converted to Hyatt brands.
years,
The disposal is a further step in Starwood’s unpicking of its 2005 purchase of the Societe du Louvre portfolio, which brought with it Europe’s second largest hotel group, Louvre. The Martinez in Cannes, Palais de la Mediterranee in Nice and Paris
properties the Hotel du
Louvre and Concorde Lafayette were sold as a single package to Qatar Holding. According to French newspaper Les Echos, the winning bidders beat Accor, who pitched in partnership with Unibail-Rodamco. Concurrently with the sale,
Starwood announced the first openings for its new, boutique
hotel brands Baccarat and 1Hotel. Five openings have been promised within the next 24 months, in Morocco, Florida and New York. Hyatt has announced it will
convert the 1,700 room Louvre purchase to its brands from April, and give each a makeover. The Martinez will become a Grand Hyatt, while the Concorde Lafayette and Nice properties convert to Hyatt Regency. The Louvre hotel will remain under its own name for the immediate future, before being refurbished and relaunched under the company’s Andaz banner. The deal will more than double
Hyatt’s presence in France at a stroke. Peter Norman, senior vice president, real estate and development, EAME for Hyatt, said: “There is significant demand for our brands in Europe, and we are delighted to expand our representation in these high- barrier-to-entry markets with a single transaction.
These
destinations have consistently high demand – which gives us a fantastic opportunity to increase awareness of all Hyatt has to offer.”
“Completing the sale of a
majority of our luxury hotel assets marks an important milestone in the ongoing monetisation of the Groupe Du Louvre portfolio,” said Barry Sternlicht, Chairman and CEO of Starwood Capital Group. The company is retaining the core of Louvre, which today operates more than 1,090 hotels across brands Première Classe, Campanile, Kyriad and Golden Tulip. “We have sold more than USD3bn in assets since closing, and will continue to maximise the value of our remaining assets to generate attractive returns for our investor partners. In the coming years, we expect to continue our expansion and renovation of our
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