Lloyds selects finalists for £190m Project East UK hotel loan portfolio

Lloyds Banking Group has shortlisted a four-strong shortlist for the circa £190m Project East UK hotel portfolio for which final bids are due in two weeks.

LBG logo for webDeutsche Bank, Bank of America Merrill Lynch, Cerberus Capital Management and Lone Star are all through to the final round, CoStar News understands.

When Project East originally came out the much larger circa £300m UK hotel loan portfolio included Cordial Hotels, the company which owns the UK Menzies hotel chain, but these loans were pulled out.

Project East is now comprised of 38 hotels across 10 loans with a geographic spread of assets throughout the UK.

Lloyds instructed a valuation firm to work alongside KPMG, which is mandated to sell Project East, to conduct desktop valuation of all the hotels, which came in around £135m.

Pricing for Project East is expected to come inside that desktop valuation. Final bids are due in two weeks’ time, on 3 December.

The largest hotel within the remaining 38-strong Project East property portfolio is the five-star St. Andrew’s Bay Golf Resort & Spa, southeast of Dundee in Scotland, which has an approximate current value of around £40m.

Project East also includes 14 remaining Forestdale hotels, which Citibank’s former global head of real estate, James Brent, acquired through his Akkeron Hotels company launched in December 2009 with a mix of equity, deferred payments and a 15-year £32m Lloyds revolving credit facility.

The Forestdale sub portfolio in Project East comprises three-star hotels spread across England, with hotels range in size from 34 bedrooms to 145 bedrooms and are located in towns and cities such as Cambridge, Bristol, Southampton, Winchester and Bath.

Project East also includes five Hollybourne hotels, three in Surrey and two in Hampshire.

Back in February, Lloyds sold Principal Hayley’s 23-strong UK and European hotel chain to Starwood Capital for £360m, financed with a three-year £200m Citigroup senior loan. Morgan Stanley Real Estate Funds was the underbidder on Principal Hayley.

More recently in May, Allied Irish Bank sold the circa £200m Project River UK non-performing UK airport hotel loan portfolio to Davidson Kempner, a New York-based hedge fund, for around £140m.

All parties declined to comment.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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