The owner of Old Spitalfields Market, Ashkenazy Acquisition Corporation, has agreed to buy Grosvenor House Hotel from The Sahara Group for around £600m.
The chairman of Indian-based Sahara, Subrata Roy, is currently on bail due to his failure to repay money owed to the Securities and Exchange Board of India and the proceeds will be used to make repayments.
The special purpose vehicle that has agreed to buy the 420-bed hotel on Park Lane, W1, is GH Equity UK, which is backed by New-York based Ashkenazy. It is understood that Ashkenazy is considering syndicating a minority stake in the hotel to a Chinese investor post closing.
An initial payment of £75m is expected to be received by the Indian court administering Roy’s proceedings within 10 working days.
Roy has until 15 July to repay around $225m (£178m) or face going to jail and owes a total of around $1.5bn (£1.1bn).
Ashkenazy is a private investment firm with a real estate portfolio worth more than $10bn (£7.9bn), predominantly in the US and Canada.
It is chaired by Ben Ashkenazay and its portfolio includes 660 Madison in New York, the home of Barneys department store, and Old Spitalfields Market, E1, which it bought in 2013 for £110m from Ballymore in what is thought to be its only previous UK deal.
The company is also in discussions with Sahara to buy the Plaza Hotel in New York, having teamed up with Saudi prince Al-Waleed Bin Talal.
Sahara’s portfolio also includes the Dream Downtown in New York.
As well as Ashkenazy, the sale of Grosvenor House drew interest from Qatar Investment Authority and a consortium of Saudi investors fronted by UK-based family office 3 Associates.
Sahara bought Grosvenor House Hotel in 2010 from Royal Bank of Scotland for £470m as the bank looked to dispose of non-core assets in the wake of the financial crisis.
In 2014 Roy was jailed, and later released on parole, for using bonds from investors to raise funds that the regulator claims were not permitted products and Sahara had not sought consent to issue.
The Grosvenor, along with the Plaza and Dream Downtown, was placed into administration in 2015 after Sahara defaulted on repayments on debt held by Bank of China. Administrators at Deloitte were subsequently appointed to Grosvenor House, which in turn appointed JLL to act on their behalf.
In January, the Reuben Brothers refinanced the £684m debt package secured against the portfolio and the hotels were removed from the administration process.
Ken James, one of the founding partners of Urban & Civic, is advising Ashkenazy.
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