• Hotel property continues its allure

The pursuit of hotel property by funds is continuing apace with the latest deal involving a £73m portfolio of Ramada Jarvis properties in the UK.
   Strategic Investment Management, the property wing of Sigma Capital Group, has teamed-up with Northern Ireland based WG Mitchell to launch what is its fifth fund and largest partnership to date.
   WG Mitchell’s hotel experience includes last year’s £43m purchase of the Radisson in Edinburgh. It is putting in 10% of the £14.8m equity in the latest deal.
   The three hotels involved are in Birmingham, Gatwick and Hatfield. They were part of the nine hotels sold to and leased back from Lioncourt in 2002 in a £150m deal.
   The net initial yield on the hotels is 5.45%. They are on 35-year leases with 32 years left to run. The 449 rooms in total generate generated sales of £13.5m in the last year.
   The deal is an excellent result for Lioncourt which is pulling out half of its original investment from less than a quarter of the rooms it bought back in 2002.
   The sale of the rest of Jarvis, however, appears to have gone quiet after being put on the market by IBI Corporate Finance more than a year ago. A price of £200m was initially sought for a “quick-flip” deal that would have seen the chain sold on just 18 months after being taken private by Lioncourt.
   Investors seem prepared to pay eye-watering amounts for average assets provided they are neatly packaged-up, preferably in a long-lease structure. The appetite for combined property and operating companies appears much more subdued.

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