Cerberus Capital Management has paid £225m – a 7% yield – for an 18-strong portfolio of Holiday Inn hotels.
The portfolio – known as LRG2 – has been sold by a joint venture between Lehman Brothers Real Estate, Canadian propco Realstar and Singaporean investor GIC Real Estate for almost £25m above the original asking price.
The hotels will continue to trade as Holiday Inns under a long-term franchise agreement with UK hotel operator Interstate Europe.
They were brought to market in January for £200m, marketed by US broker Eastdil, and sparked a bidding frenzy from international investors, including strong Asia Pacific interest.
The hotels are located across the UK in cities including Southampton, Edinburgh, Leeds and Hull, and total 2,443 bedrooms.
They were originally part of a portfolio of 73 hotels bought by LRG Acquisitions from InterContinental Hotels Group in a £1bn deal at the height of the market. The trio then had to carry out a major debt restructuring during the downturn, after the £680m loan secured against the hotels matured in 2010.
Last year, 21 regional assets were sold to hotelier Kew Green for around £70m. The latest sale to Cerberus leaves only London assets remaining.
“They have defiantly achieved a good price with this sale, and it reflects competitive bidding,” said one hotel agent.
Jonathon Hubbard, chief executive of JLL’s hotels and hospitality group, said the hotels acquisition “marks another step which shows continued interest in the regions and provincial market”.
Cerberus has been increasing its investment in the leisure sector recently, buying a £185m portfolio of Spirit and Orchid pubs in August last year.
