Macdonald Hotels & Resorts has entered into agreement to divest two of its UK hotels to London-based private equity firm Zetland Capital Partners’ controlled funds.

Properties involved in the deal include 338-key Macdonald Manchester Hotel and the 156-key Macdonald Holyrood Hotel.

Located in the heart of Manchester, the four-star Macdonald Manchester Hotel offers complementary Wi-Fi, Spa and Technogym, 14 high-tech meeting spaces and on-site Scottish Steakhouse restaurant.

Macdonald Holyrood Hotel features luxurious spa, conference and event space, gym and two dining venues. The hotel is a 15-minute walk from Waverley Railway station.

Zetland Capital Partners managing partner Ahmed Hamdani said: “We are delighted to have acquired these two very well-located hotels in prime UK cities.

“Our strategy is to provide significant investment to refurbish and reposition these hotels. This acquisition aligns with our investment strategy to purchase and invest in well-located hotels across the UK, where we can materially enhance the product offering and benefit from the recovery of demand in the UK’s key cities.”

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Following the acquisition, Macdonald Manchester Hotel and Macdonald Holyrood Hotel will be managed by Hamilton Hotel Partners, the joint venture partner of Zetland.

Financial terms of the transaction are not disclosed but is claimed to be one of the largest transactions outside of London this year.

Macdonald Hotels & Resorts chief financial officer Aaron Falls said: “The successful sale of these well-known hotels is a major milestone in our strategic business plan, which will see a substantial reinvestment in upgrading the remainder of our 28-strong hotel portfolio and nine resorts, together with further debt reduction.”

Real estate service provider Savills served as advisor to Macdonald Hotels & Resorts in relation to the transaction.

Law firm CMS Cameron McKenna Nabarro Olswang and Alvarez & Marsal acted as the legal advisor and tax advisor, respectively.

The acquisition was funded by investment firm Starwood European Finance Partners.