Family-owned Macdonald Hotels is considering a £400m sale of the business.
It has held talks with KOP Properties, a subsidiary of Singapore-listed KOP, although a deal has not been agreed.
The West Lothian-based firm has 45 hotels in the UK as well as four resorts in Spain and one in Portugal. Its portfolio of four and five-star regional hotels includes the likes of the Randolph in Oxford (pictured) and the Burlington in Birmingham. The proposed deal would see the current owners retain a handful of the freeholds of the UK hotels and all of those overseas.
With more than S$55bn (£30.6bn) of assets, KOP is a major owner in Singapore and across Asia. Its portfolio includes the Wintastar winter resort in Shanghai and two luxury Montigo Resorts in Indonesia.
KOP’s strategic plan includes growing its property business through expansion into overseas markets, while taking control of “the entire value chain in real estate” as well as being a leading regional hospitality company focused on “creating authentic hotel experiences for its guests”.
KOP has predominantly historically invested only in Asia and has no current European assets. It previously owned the 39-bed Cranley Hotel in South Kensington before selling out in 2016 for £17.5m and was also part of a consortium with China’s Reignwood Group to redevelop Ten Trinity Square – but KOP exited before the project began.
In its latest set of published accounts for the year to 30 March 2017, Macdonald made an £11.9m operating profit. However, in January Macdonald made 50 jobs at its Bathgate headquarters redundant, which it attributed to “unsustainably high” costs, above-inflation rises in businesses rates and energy and utility bills.
Those results showed Macdonald had £362.7m of fixed, tangible assets and loans from Bank of Scotland (which has been owned by Lloyds since 2009 after the onset of the financial crisis) totalling £241.9m. These loans, which were secured against the totality of the company’s UK portfolio, were due to be repaid on 30 September last year, although it is understood the facility has been extended.
In 2003 Bank of Scotland backed a £620m, take-private, management buyout that saw the bank take a 50% stake in the company. During the boom, the company’s debts swelled to £700m, but following sales of assets in 2014 Lloyds swapped its half share in the firm for loan notes, providing a new £299m facility. It is now owned predominantly by the Macdonald family, notably Donald Macdonald, who founded the group in 1990.
However, a filing by Macdonald in May last year shows Peter Cummings, the notorious former managing director of corporate banking at Bank of Scotland (and famously the only person fined by the FSA as a result of the banking crisis) owns 0.136% of the shares in the company. The proposed deal at £400m could net him around £544,000.
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