Land Securities Gears Up To Offload £500m Of Hotel Assets
Main Photo: The Novotel London West, One of the Hotels Being Sold
Date: September 2021
Names: Mostly Under Accor Brands such as Ibis and Novotel
Location: London, Glasgow, Manchester and Other Locations, England, UK
Number of Keys: TBA
Seller: Land Securities, who acquired a portfolio of 30 hotels in 2007 for £439m from Accor
Buyer: Yet TBA
Land Securities, the largest commercial property developer in the UK, is gearing up to offload £500m of hotel assets from its portfolio. Several of the hotels that could be sold are in London, including the Novotel London West (Hammersmith), valued at £50m. The firm owns 21 hotels, spread across the UK in cities such as Manchester, Glasgow and London.
The hotels acquired in 2007 were leased back to Accor on 84-year leases, with 12- year rolling breaks.
Landsec announced its intention to restructure its commercial property portfolio by selling off hotel, leisure and retail park properties in October 2020. The group will reinvest the funds raised in new office and mixed use properties in London and, “potentially other major UK cities”.
A Land Securities spokesman said: “We’ve made it clear that our strategy is focused on shaping three types of place that connect to our purpose: retail destinations, office clusters knitted into the fabric of our cities, and mixed-use, living led sustainable neighbourhoods.”
London has seen a 32% increase in bookings in the last two months, compared to 31% for the UK as a whole, but has been hit by the lack of tourists visiting the capital. Just 12% of those searching ‘greater London hotels’ are from outside Europe, according to Avvio data.
Landsec reported sharp falls in profits in May after tenants struggled to service rent payments amid ongoing Covid restrictions that suppressed demand in the leisure and hospitality sectors and commercial property valuations plummeted.
Landlords have faced tough choices over whether to dispose of non-performing real estate assets, especially in the hotel sector, or bet on a recovery in valuations after Covid restrictions are lifted and demand floods back.
THPT Comment: Interesting that a major like Landsec are not going to wait for the return to the glory days for hospitality, which is definitely on the return, especially in the leisure sector, which includes London hotels achieving room rate upto £200 or so. Maybe this is specific to Landsec’s woes in the retail sector rather than an indictment on hospitality as such?
First Seen: City AM
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