BLP advises on £1bn of deals as confidence returns to UK hotel market

Law firm Berwin Leighton Paisner (BLP) revealed today that it has completed five significant hotel transactions – worth a total of over £1bn in the hotel sector over the last quarter.

With activity levels still comparatively subdued across the property market since the start of the financial crisis in 2007, particularly for development, the firm sees the news as a positive indicator of growing market confidence. BLP’s prominence in the limited activities, including one of the largest hotel investment deals of the year, underscores the law firm’s leading position in the hotel sector.

The deals spanned both the development and investment markets, in both London and international markets:

  • Sol Melia – a £250m London hotel development where Sol Melia will develop and operate a 179 bedroom hotel on the Strand and Galliard will develop and sell 79 apartments
  • RBS – acting on the £215m sale of the Cumberland Hotel by the bank to a joint venture of U.S. private equity firm Starwood Capital and property investor London & Regional
  • Tahiti hotel securitisation restructuring – the original transaction involved the securitisation of a £535m facility A1 loan secured by a portfolio of 61 hotels operated by Intercontinental Hotels Group. The portfolio was valued at £890m as at 31 December 2009.
  • Barclays – the provision of debt funding for the acquisition of the Blakes Hotel in London by Polenta Holdings (owned by Leisure entrepreneurs Meir Abutbul and Navid Mirtorabi)
  • Gatwick Airport – the re-development of Longbridge House at Gatwick Airport into a Hampton by Hilton Hotel

Andrew Little, head of the BLP Hotel group, said: “After a long period of restructuring and stagnation we’re now seeing the beginnings of increased activity in the hotel sector, both for acquisitions and financings.

“In terms of development the market is still cautious, but the proposed re-development at Gatwick Airport and Sol Melia’s decision to develop and operate a high profile but half built site located on the Strand are encouraging signs.

“The sale of the Cumberland has been one of the largest UK hotel investment deals this year and the sale of The Blakes hotel supports the view that investor interest in the boutique end of the market is beginning to return

“It is still too early to say if this will be a sustained recovery, but with the bid to offer gap appearing to close for quality hotels in the UK and some international cities, we are hopeful that we will see this trend continue and build.”

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