London Hotel Portfolio Changes Hands for $1.3B

Grange St Paul’s

Queensgate Investments has acquired four London hotels adding up to 1,345 guestrooms from longtime owner Grange Hotels for £1 billion, or approximately $1.3 billion, and has an agreement with Fattal Hotel Group to run the portfolio.

Grange St. Paul’s, Grange Tower Bridge, Grange City and Grange Holborn add up to 930,000 square feet. The properties have significant meeting and conference spaces and high-quality spa and leisure facilities, including swimming pools.

Israeli-based Fattal will renovate and reposition the assets, bringing its own London portfolio to seven hotels with 2,000 keys. The firm operates more than 200 hotels across 18 countries.

“The four hotels will undergo an extensive renovation plan and will be flagged by our Leonardo Royal and NYX brands,” David Fattal, CEO of Fattal Hotel Group, said in a prepared statement.

Queensgate, a private equity firm with a track record in hotel transactions, is a partnership between the Kow Family, Alvarium Investments, Peterson Group and Dilmun. The firm secured a fully underwritten debt facility from Société Générale, The Carlyle Group and Cheyne Capital Management for the purchase.

HFF advises grange

Grange Hotels, one of London’s largest privately held hotel companies, had owned the four assets for about 20 years. The firm, which develops, owns and operates hotels, had built the portfolio to 17 strategically located upscale properties, mainly in Central London, before the sale. It still owns 13 hotels and several development sites in prime locations across the city.

HFF Securities Ltd., Grange Hotels’ exclusive financial advisor since December 2016, worked with legal and tax advisers to restructure the company and subsequently sell its largest assets. The HFF team was led by Senior Managing Directors Rajan Somchand and David Church along with Senior Director Edward Bradford. Brown Rudnick and EY advised Queensgate.

“This marks the culmination of more than two years of work that started with strategic review, then the restructuring and then the sale process itself,” Somchand said in a prepared statement.

“We had to take many widely differing commercial, legal and stakeholder objectives into account when designing this process and it highlights HFF’s ability to deliver on the most complex corporate finance assignments,” Bradford added.

Church noted the HFF team was “confident the market would understand the scarcity value of these unencumbered London freehold assets and we were rewarded with very strong bidder interest.”

US hotel footprint

In October, Queensgate made its second transaction in the U.S., acquiring Courtyard by Marriott Washington, D.C., for $54.1 million from affiliates of Quadrangle Development Corp. and Capstone Development.

The firm plans to rebrand the 148-key hotel in Dupont Circle this year as part of its Generator chain of hotels. QI, which has at least 14 Generator hotels across Europe, opened its first U.S. location in South Beach, Miami, in September.

Image courtesy of HFF