MWB presses on with hotel sale after IPO debacle

London-based property company Marylebone Warwick Balfour Group (MWB) issued a statement on Wednesday in response to strong criticism from a key shareholder over a delay in the sale of a hotel portfolio for £495 mln (EUR 735 mln) to Vector Hospitality.

The sale of MWB's 20 Malmaison and Hotel du Vin hotels in the UK was put on hold earlier this month when Vector Hospitality was forced to cancel its IPO due to lack of investor interest. Even a hefty cut in the launch price of Vector's shares failed to garner enough interest in its plans to launch the first hospitality real estate investment trust (REIT), for a EUR 3 bn offer size.

Mercury Real Estate Advisors, which owns just under 16% of MWB, wrote to the board on Tuesday to demand that the hotels be sold on the open market rather than to Vector, arguing that there was a conflict of interest given that MWB ceo Richard Balfour-Lynn is also a director of Vector. Mercury said that Balfour-Lynn should be removed as ceo of MWB if the portfolio was not tendered to independent buyers.

Rejecting Mercury's demands, MWB's board said the proposed sale to Vector had been overseen by a committee made up of company officers who had no connection to Vector. Independent valuations were carried out by CBRE Hotels and DTZ Debenham Tie Leung.

Ultimately, CBRE Hotels and the committee concluded that a sale-and-leaseback would generate a higher return for MWB's shareholders than a sale of the property and operating company combined.

MWB chairman Eric Sanderson said the transaction was approved by 91.75% of the company's shareholders during an extraordinary general meeting and that they were aware the sale price was EUR 133 mln higher than the independent valuation of the properties as of 31 December 2006.



Noting that the board would sell the portfolio on the open market if Vector failed to meet the end-June deadline, MWB's statement concluded: 'We have demonstrated a successful track record of selling hospitality assets over many years, and are confident that we will continue to do so'.