UK real estate investment trust Landsec has sold its entire hotel portfolio to Ares Real Estate funds and EQ Group for £400m (€465m) as part of a plan to focus its resources on core sectors with a “competitive advantage”.
Landsec said the hotel portfolio concentrated in London and other major UK cities, was sold to Ares alongside its operating partner EQ at a price slightly below the assets’ September 2023 book value of £404m.
The assets consist of midscale and economy properties with the majority of value in Central London and the remaining assets primarily located in major UK city centres, including Edinburgh, Manchester and Birmingham.
The fully-let portfolio comprises 21 assets and is let to AccorInvest and generated net income of £28.4m over the company’s last reported financial year, Landsec said.
Ares said AccorInvest is expected to give up the leases and transfer operations of the relevant hotels to Ares.
John Ruane, partner and co-head of the European business at Ares Real Estate, said: “This transaction highlights our ability to create solutions which unlock assets in today’s dislocated market.
“The hotels are well located with an attractive weighting to the London market and have seen performance recover strongly since Covid. The rationalisation of the ownership and lease structure offer us exciting opportunities to add value over time.”
Namid Mangalji, senior MD and co-founder at EQ, said: “We are delighted to partner with Ares to acquire this unique portfolio of hotels through a complex series of transactions. “Together we can leverage our combined deep track record in deploying capex, operational turnaround, rebranding and repositioning.”
Mark Allan, Landsec’s CEO said: “We said in late 2020 that our focus would be on areas where we have a genuine competitive advantage. In line with that strategy, we have continued to recycle capital out of assets where our ability to add further value is limited.
“The sale of our hotel portfolio and other non-core assets will further strengthen our balance sheet and leave us well placed to take advantage of opportunities in the market as they arise.”
As of 30 September 2023, London-listed Landsec owned a £10bn portfolio spanning 23.1m sqft of retail, leisure, workspace and residential hubs. The portfolio includes the iconic Piccadilly Lights in the West End and the regeneration of London’s Victoria.
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