Guernsey-based lender takes control of Union Hanover after MBO fails

Guernsey-based lender, Real Estate Debt Securities (REDS) has announced that it is taking control of boutique hotel owner Union Hanover Group.

The transfer of ownership occurred after a proposed management buy-out (MBO) by the management team of Union Hanover Securities, the group’s UK service agent, fell through. A successful MBO would have resulted in REDS being repaid its investment into the group.

EquityBridge Asset Management, through its Secured Fund, a fixed income fund, was the major backer and capital provider to REDS through an asset-backed bond purchase programme.

Union Hanover Group owns a portfolio of UK leisure investments, including a number of hotel development projects in London, Edinburgh and Aberdeen. Earlier this year the company secured planning consent for its £126 mln (€172 mln) Penny Brook hotel scheme in Shoreditch To Stratford, UK.

The 249-bed hotel forms a 25-storey tower and boasts restaurants and cafes at ground floor level, with conference facilities and event space with a terrace on the second floor. The development also includes an adjacent 137-bed Adagio.

Other projects include an Urban Villa in Aberdeen, and in Edinburgh and its Sarani Resort in Panama.

REDS said it is undertaking an audit of the assets within the portfolio to consider whether strategic disposals or restructuring will best align with the investment profile of its capital providers. This will also enable it to settle bonds that were delayed as part of the proposed MBO.

'We are clearly disappointed that the exit strategy we had envisioned did not transpire. However it is clearly a particularly attractive portfolio and our being able to negotiate directly with interested parties and potential partners facilitates a greater tactical alignment with the fund’s strategy,' commented Warren Malschinger, managing director of EquityBridge.

He added: 'We will now consider how the portfolio can best be asset managed to blend repayment of shorter-term loans while delivering the continued upside in the current market of being invested in longer-term projects, in line with the fund’s investment goals.'