Prince Alwaleed bin Talal of Saudi Arabia and Lloyds Banking Group have closed the refinancing of The Savoy Hotel on the Strand with a £200m senior facility split equally by Crédit Agricole and DekaBank, as part of a wider five-year £458m debt and equity restructuring.
Breezeroad, which owns the 124-year old Savoy Hotel, has replaced a four-tranche £220.8m legacy Bank of Scotland senior loan as well as four additional mezzanine and equity positions, together worth £228.4m, with a five-year £100m senior loan from both Crédit Agricole and DekaBank and fresh mortgage-secured mezzanine-like loans.
The margin on Crédit Agricole and DekaBank’s senior loans is between 380 and 400 basis points over three-month LIBOR.
Lloyds and Prince Alwaleed’s Kingdom Hotel Investments (KHI) each have a 50:50 joint stake in Breezeroad, and both partners provided two mezzanine facilities – at £83m and £27.4m – in the legacy capital stack.
Effectively, Lloyds has reduced its net investment in the Savoy Hotel, having previously provided senior debt through its legacy £220.8m HBOS loan, as well as the mezzanine loans and equity ownership in Breezeroad.
Lloyds’ equity ownership in Breezeroad – held by the bank’s legacy HBOS non-core equity and mezzanine subsidiary Uberior Ventures – has migrated to the new Lloyds subsidiary, Prestonfield Investments, which houses the bank’s equity and mezzanine investments for core clients.
Under the new capital structure, Lloyds’s Prestonfield has extended three new mortgage-secured mezzanine-like loans – at £60m, £50.5m and £32.5m, respectively.
Prestonfield’s £60m and £50.5m mezzanine loans are priced at 12% and 15%, respectively.
Prince Alwaleed’s KHI has similarly extended a £50.5m mezzanine-like loan, priced at 15%, along with a £32.5m equity tranche and two smaller facilities, at £16.75m and £15m, both priced at 7.75%.
All eight fresh facilities – which funded around 10 days ago – mature in March 2018.
KHI, is a subsidiary of Kingdom Holding Company (KHC), which Saudi billionaire Prince Alwaleed founded and chairs.
The Saudi billionaire bought the grade II-listed Savoy Hotel eight years ago for around £220m from a consortium of Irish investors, led by Derek Quinlain’s Quinlan Private.
A major refurbishment was then undertaken to renovate the iconic Strand hotel, with the Savoy closing for almost three years from mid-2007 to 10 October 2010. The projected £100m refurbishment costs eventually ran to £230m – more than the figure which Prince Alwaleed bin Talal reportedly paid for the hotel itself.
The considerable extra costs were financed both by intra company loans from the Saudi Prince’s KHC as well as additional mezzanine and equity investments by Lloyds.
Prince Charles officially re-opened The Savoy on 2 November 2010.
In a statement published this afternoon in the Middle East, Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, chairman of Kingdom Holding Company, said: “We were delighted in 2005 to have had the opportunity to acquire and restore one of the world’s most famous hotels, and nearly eight years later, we are now proud to announce that we and our partners at Prestonfield, Bank of Scotland and Fairmont have firmly re-established the Savoy’s leading market position, and we welcome our new lenders from Crédit Agricole CIB and DekaBank to share in the future of this legendary hotel.”