The Hilton portfolio of 12 hotels and more than 2,400 rooms includes properties in London, Edinburgh, Dublin, Bristol and Coventry. It was valued at £ 555million, according to people familiar with the terms.
The transaction was financed by debt from the credit arm of the private equity group Apollo Global Management.
Henderson Park has said it plans to invest an additional £ 40million in expanding hotels and improving their facilities. He has a building permit to build two more floors on the Edinburgh hotel, for example, adding 31 rooms.
“We are anticipating a massive recovery on this, so our bet on the Hilton portfolio is on phenomenal assets,” said Nick Weber, founding partner of Henderson Park.
“You have Islington and Chelsea, you have Edinburgh. . . and we feel that we are buying it at a very attractive price. This is not a distressed price. We believe that we are playing in the recovery that we are seeing in our other assets, ”he added.
Despite the near total halt in travel during successive closures, there have been far fewer insolvencies in the hotel industry than many analysts and investors expected at the start of the pandemic.
Homeowners, backed by lenient banks and government support programs, have held onto their properties in hopes of getting better returns on their investment as travel recovers.
The Hilton properties were sold by a state-owned company through a screening process involving only three or four potential buyers, those who were aware of the negotiations said.
The deal is in line with the value of previous Henderson Park hotel transactions, which include the purchase of the 440-room Westin Hotel in Paris and two of the UK’s largest hotels – the London and Birmingham Hilton Metropoles .
Hotels make up just over a fifth of Henderson Park’s portfolio, which also includes office buildings and industrial sites. It has invested $ 11 billion in real estate assets since its inception in 2016.
The 1,100-room London Metropole occupancy rate averaged 49% in September and had been higher on weekends, said Weber of Henderson Park. Meeting and event bookings in 2022 were at the same level as they were for 2020 in September 2019, he added.
The average UK hotel occupancy rate hit a low of 21.9% in April 2020, according to industry data provider STR, but fell to 71% in August, boosted by national holiday demand .
Central London hotels that depend on international visitors are lagging behind, averaging 56% occupancy in August due to the UK’s strict travel restrictions, which only started to ease during last month.
Joe Green, co-head of hotel brokerage at real estate firm CBRE, said the lack of financial difficulties in the industry, coupled with confidence in hotel recovery, meant property prices remained high.
“A lot of money has been raised by investors for hospitality offers and when there is a lot of money raised and not a lot of offer which is good for pricing. “
Despite warnings that video conferencing would hit the industry, Green added, “Investors expect travel to return to where it was before and people will have to travel for work. “