Real estate funds managed by Ares Management (Ares), in association with operating partner EQ Group, has purchased Landsec’s hotel portfolio for £400m ($499.31m) in cash.
Landsec received £350m upon completion, with the remaining £50m due within 24 months, at a 6% annual interest.
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Net proceeds from this transaction will be directed towards the company’s debt repayment.
Before the acquisition, the properties were leased to AccorInvest on long-term agreements.
With the acquisition’s closure, Ares negotiated a lease surrender with AccorInvest, transitioning the hotel operations to Ares.
This move has resulted in Ares taking over 18 hotels, encompassing 3,028 rooms, collectively referred to as the Portfolio.
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By GlobalDataThe Portfolio comprises midscale and economy hotels, with the bulk of its value concentrated in Central London.
The remaining properties are located across other UK city centres, including Edinburgh, Manchester, and Birmingham.
Ares European Real Estate Partner and Co-Head John Ruane said: “This transaction highlights our ability to create solutions which unlock assets in today’s dislocated market.
“The hotels are well located with an attractive weighting to the London market and have seen performance recover strongly since Covid. The rationalisation of the ownership and lease structure offers us exciting opportunities to add value over time.”
EQ senior managing director and co-founder Namid Mangalji said: “We are delighted to partner with Ares to acquire this unique portfolio of hotels through a complex series of transactions.
“Together, we can leverage our combined deep track record in deploying capex, operational turnaround, rebranding and repositioning.”
The acquisition consolidates the real estate and operations under Ares by ending the AccorInvest leases.
It is also said to open avenues for value enhancement through various asset management initiatives.
These initiatives include refurbishing and repositioning select assets alongside boosting the operational and financial performance of the hotels.
Additionally, Ares targets energy efficiency and reducing the carbon footprint across the Portfolio.
