The announcements this week that the Caledonian in Edinburgh and, separately, the Eton Collection, have both been sold demonstrates that the credit crunch has so far only afflicted larger portfolio deals.
But the tricky debt markets are being blamed for the pulling last week of the sale of 15 hotels owned by Royal Bank of Scotland in what would have been a much chunkier £1.1bn deal.
JJW Hotels & Resorts, the subsidiary of MBI International, made a £70m swoop on the five hotels in Eton. Milestone Capital Partners, previously called European Acquisition Capital, drove the deal by selling its 80% stake.
The founder and chief executive of Eton, Peter Tyrie, is to head up the now 15-strong JJW Luxury Collection. The existing JJW properties include the Scotsman in Edinburgh, 42 The Calls in Leeds, Berners in London, the Grand Hotel in Vienna, and Hotel Balzac and Hotel de Vigny in Paris. JJW paid £63m in early 2006 for the three-strong Scotsman group. At the time, JJW said these properties were to be the basis for a new pan-Europe group but they have continued to trade separately.
The challenge for Tyrie, a former executive with Mandarin Oriental, is to bring a coherent thread through his enlarged portfolio. Tyrie said that the two groups were a perfect fit, a point also made by Sheikh Mohamed Bin Issa Al Jaber, founder, chairman and CEO of JJW and MBI International.
Two projects are already underway, another property in Vienna and another golf course in Portugal.
Meanwhile, the Caledonian has been sold by Hilton via agent CBRE Hotels for £51.7m to a group of Israeli investors who have also agreed to inject a £13.5m to upgrade the property. Debt finance came from Bank of Scotland Corporate.
Israeli investors were also among the backers to buy the 15 hotels from RBS. The deal had been put together by Jeremy Robson the former head of RBS’ principal finance operation.
It is understood that the deal collapsed due to the increased cost of debt that has resulted from the current credit market turmoil. It is not clear whether Robson, who was using his vehicle Robson Asset Management, or RBS itself, which was also underwriting the debt, stepped back.
It is the second time in as many months that the hotels have failed to sell. They were part of the Vector Hospitality portfolio. Vector’s float was aborted in June.
The £700m sale of another part of what would have been Vector, the Marylebone Warwick Balfour portfolio of Malmaison and Hotel du Vin properties, remains on course, insisted MWB this week. Market rumours had suggested a number of high profile bidders, including Quinlan Private and Robert Tchenguiz’s R20, have pulled out of the bidding which might force a lowering of the asking price.
Another deal that was crunched last week was the Eu41.5m acquisition of Kasterlee, which trades as Choice Hotels Ireland.
TVC Holdings led a consortium of investors to buy the 11 Comfort Inns and Quality Hotels, all based in the Republic of Ireland. TVC will hold 29% with other equity backers including new CEO Pat McCann, the former boss of Jurys Doyle, and Davy Private Clients. Debt is from Ulster Bank.