Further details of the UK’s first hotel REIT have emerged ahead of a formal announcement that is expected next week.
When it floats – the end of May is targeted – the collection of just less than 80 hotels will also be the first UK REIT in all property asset classes to be created from scratch rather than being a conversion of an already listed property company.
The assets being injected into the venture are principally those owned by the Alternative Hotel Group, the vehicle created by Marylebone Warwick Balfour executives to buy De Vere and Initial Style Conferences.
Also part of the package is 15 hotels owned by the Royal Bank of Scotland that were acquired from Hilton in November 2005.
Not all of the owned 40 De Vere hotels and conference venues are to be part of the grouping as some are under refurbishment such as the Grand in Brighton. As well as the De Vere brand, there are an additional 17 Village Leisure properties.
Also being put in are the Malmaison and Hotel du Vin properties, currently owned by the listed MWB.
Although the portfolio is likely to have an asset value of about £2.5bn, it was planned to have an even bigger grouping by including the 47 Marriotts bought by a group of investors led by Quinlan Private.
This £1.1bn purchase completed at the end of March and was the first major transaction by Quinlan’s new London office, comprising a transaction team led by Pauline Bradley and a private client team led by Ruth Kennedy.
Quinlan has put in about 44% of the £200m equity with the rest from an Israeli consortium led by Igal Ahouvi. Among these investors are Electra, First International Bank of Israel and Delek Real Estate.
Quinlan is to be the asset manager for the Marriott portfolio and this looks as though it was a key stumbling block in putting the two portfolios together. AHG was committed to a relationship with Vision Hospitality Asset Management, the company headed by Clive Hillier.
As part of the creation of the new REIT, Vision is also being transformed and will have Sir David Michels, the ex-Hilton Group CEO, installed as non-executive chairman.
Sir David will also sit on the main board of the new REIT, tipped to be called Vector, which will be headed by Richard Balfour-Lynn, CEO of MWB and chairman of AHG.
There has been less of a problem bringing together the two Scottish banks to create Vector. RBS is contributing the Hilton portfolio and Halifax Bank of Scotland is both a debt and equity backer of AHG.
When the formal announcement to seek a listing is made next week, it will further seal the acceptability of hotels as mainstream property assets. Rather than offices, retail or industrial, investors will have their first taste of a UK REIT offering via the hotel sector.
As with all REITs, the focus is on income maximising assets and therefore certain trophy properties have been excluded from the portfolio, including the Grosvenor House.