Blackstone set to buy Mint Hotels
PRIVATE equity giant Blackstone is poised to undertake one of the biggest hotel deals in the world this year with the purchase of Mint Hotels for around £575m, according to PropertyWeek.com.
The deal would mark a stunning return to the European hotel sector for Blackstone, which was one of the biggest buyers of hotels in the global credit boom up to 2007, and see it take a trophy portfolio in a hard-fought, bank-led sale.
The sale of the portfolio comes after the owner of the portfolio, the Orr family, appointed JP Morgan to undertake a strategic review of the business last year. Blackstone was picked as preferred bidder for the portfolio this week, and beat off fierce competition from private equity firm Texas Pacific Group.
The hotels are heavily leveraged with more than £450m of loans from Lloyds Banking Group, which expire in June 2012. Due to a breach of banking covenants in 2010 the company’s debt covenants were readjusted and its debt extended to 2012.
It is not yet certain if Lloyds will provide a new debt facility for the company following the sale. The Orrs are understood to be keen to retain an involvement in the business.
The most recent asset value of the portfolio in March 2010 values the hotels at £465m, but this is before the completion of the Mint Hotel Tower of London, which opened in December 2010 and Mint Amsterdam, the only non-UK hotel in the group, which opened in June.
The investors are understood to be valuing the portfolio based on its projected future success, once the hotels have become established. The assets are expected to be worth as much as £720m by 2013/14.
In June Property Week revealed that Blackstone had been shortlisted as one of three bidders for the portfolio of eight hotels, alongside the Texas Pacific Group and London & Regional.
Other bidders thought to have bid on the portfolio include Realstar Group, Host Hotels & Resorts, Morgan Stanley Real Estate Fund and Westmont Hospitality Group. Information on the sale is understood to have been sent to up to 40 parties.
Mint Hotel, formerly City Inns, was founded in 1995 and opened its first hotel in Bristol four years later. Its Manchester hotel was opened in May 2007.
Lloyds has been undertaking a comprehensive restructuring of the myriad hotel companies to which it leant during the boom, the majority of which are now over leveraged.
All parties declined to comment on the Mint deal.
