Crowne Plaza London the City eyed by long income investors for circa £50m

JLL is advising ownership of the Crowne Plaza London The City on the potential sale subject to a ground rent.

The Crowne Plaza London The City is currently owned by Marg Galadari and is operated by InterContinental Hotels Group (IHG).

The hotel provides 204 rooms, 2 restaurants and 3 bars/lounges along with 5 meeting rooms.

Galadari is the former CEO of the United Arab Emirates conglomerate, the Galadari Brothers Group, which acquired the property in 2008 for around £85 mln from Italian hotel operator, Gruppo Statuto.

It is thought the hotel was initially discreetly touted for sale for around £100 mln with value-add fund managers approached. However, it seems a more creative financing solution is being looked at providing the ownership with capital whilst retaining an obligation to pay a ground rent to a new freehold owner.

There are several investors with a track record in making such long income investments in various asset classes, including hotels. These include Alpha Real Capital, Long Harbour, M&G Real Estate, Aberdeen Standard Investment, PGIM, Aviva Investors, L&G, Nuveen, CBRE Global Investors, LaSalle Investment Management, Church Commissioners, BBC Pension Fund, and Consensus Business Group. However, it is not known if these companies have been approached.

The sale or creation of commercial ground rents has been growing in popularity in recent years. Investors argue they present a compelling alternative to fixed income. Typically, in the UK ground rents are long-dated and generally over 75 years with rents paid by the corporate tenant to the freeholder for the use of the property asset.