Rising interest in the provincial hotels market and the end of a management agreement has prompted a Lehman Brothers-led consortium to bring a £200m tranche of Holiday Inns to market.
LRG, a consortium comprising Lehman Brothers Real Estate, Canadian propco Realstar and Singaporean investor GIC Real Estate, has instructed US broker Eastdil to sell the last regional assets from a £1bn InterContinental Hotels Group portfolio it bought at the height of the market.
The asking price reflects a circa 7.5% yield.
The sale comes three months after it sold a package of 21 regional Holiday Inns to hotelier Kew Green for around £70m. That portfolio attracted more than 60 bids from a range of investors, including private equity funds, and eventually sold for some £20m above asking.
This latest portfolio would see LRG reduce its hotel exposure to London assets only.
It bought a total of 73 hotels from IHG in 2005 on a sale-and-management basis. The management agreement came to an end at the end of last year, meaning that any new owner could replace IHG as operator.
The package is expected to attract a wide range of interest.
“There has been solid interest from domestic and overseas investors in this type of asset as they are starting to see the benefit of hotels in the provinces,” said one hotel agent. “Holiday Inn is also one of the most powerful names in the mid-tier market and getting the chance to acquire so many in one tranche is a rare opportunity.”
Hotel sales topped £6bn last year, according to Savills – the highest annual level since 2006. Sales activity was dominated by the provinces, with 71% of deals taking place outside the capital. Portfolio deals accounted for 53% of UK hotel investment, equating to £3.2bn.
