• Airport hotel fund finds more ambitious backer

The Airport Hotels Unit Trust, the fund that owns the long leases on nine airport hotels, has been bought for over £300m by Arora Family Trust.

The move is expected to put renewed vigour into the UK's pioneering dedicated hotel fund.

The AHUT is a Jersey Property Unit Trust that owns 999-year leases on the nine hotels at Heathrow, Gatwick and Stansted.

The Royal Bank of Scotland has put in place £380m of funding and BAA Lynton Management will continue to oversee the portfolio on behalf of Arora on 10-year contracts.

Jeremey Boyes, asset management director at BAA Lynton, said that following the deal with Arora he expects the fund will now 'have more ambition'.

Future deals, although still likely to involve airport related hotels, will not necessarily be on BAA sites.

The main beneficiary of the Arora Family Trust is Surinder Arora, a former British Airways employee whose first foray into hotels started in 1999 when he opened a property at Heathrow to provide crew accommodation. He now heads up a business that owns and manages 5,500 rooms.

In October last year, Arora agreed to buy the ground lease of the Terminal 5 hotel at Heathrow for £65m. This 600-room property is to be a Sofitel opening in 2008.

Outside of airports, Arora is part owner of Wentworth, the Surrey golf course that is set to have luxury hotel.

Arora initially bought out 20% of the AHUT that was held by a Middle East based investor. The current deal has seen the acquisition of the remaining 80% held by Scottish Widows, the Shell and Coal Board pension funds and 10% held by the Airport Property Partnership, a JV between Morley Fund Management and airports operator BAA.

The Airport Hotels Partnership, the forerunner of AHUT, was formed in March 2000 with the sale of eight hotels valued at £200m. The four investors put in a total of £85m and BAA retained a 10% stake. RBS provided a £98.3m loan, representing 50% gearing.

In early 2005, the fund bought the Express at Stansted for £24m leaving it with gross assets of £255m as at March 31 last year.

RBS was advised in the AHUT deal by CMS Cameron McKenna. Macfarlanes and Lovells acted for BAA.

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