Kennedy Wilson Europe Real Estate (KWE) has completed the all-cash acquisition of a Natixis-led non-performing loan (NPL) portfolio for £61.5m, secured by eight UK Park Inn hotels leased to Rezidor Hotel Group.
Fortress Investment Group and Topland were among the underbidders on the process initiated by Natixis last September, as reported by CoStar News. Natixis managed the sales process of the Park Inn NPL in which five investors were invited to bid.
KWE paid £61.5m, reflecting a gross yield on cost of 9.3%, on total gross liabilities of £99.8m, as at the completion of the deal on Monday, reflecting a 38.4% discount.
Last September, CoStar News reported that the Natixis NPL portfolio – secured by eight hotels– had a gross unpaid balance of £95m, against an out-of-date 2012 valuation of £57m.
The two Danish investor groups paid an aggregate £131.5m in 2006 and 2007.
Furthermore, CoStar News reported that pricing for the Natixis loan pool was expected at the time to come in around the £62m to £65m range.
The EBITDA performance of the individual hotels – in Bedford, Birmingham, Cardiff, Harlow, Northampton, Nottingham, Thurock and Telford – ranges considerably.
The hotels, which together have 1,107-rooms, are leased to Rezidor Hotel Group until 2030, and a weighted average unexpired lease term of 15.7 years.
Rezidor is a Nasdaq OMX Stockholm exchange listed hospitality business, majority owned by Carlson. It owns the Park Inn and Radisson hotel brands and the eight Park Inn hotels form part of larger Park Inn portfolio of 19 hotels in the UK and 155 globally.
In a statement confirming the acquisition, Mary Ricks, president and CEO of Kennedy Wilson Europe, said: “The purchase of the Park Inn loans is a classic KWE deal that capitalises on the synergies between our real estate debt and property professionals.
“This transaction gives us further exposure to the fast improving UK hospitality sector and a high quality covenant that we look forward to actively engaging with to identify various resolution strategies and asset management opportunities to enhance the value of our investment.”
This is the second significant loan-to-own acquisition strategy which KWE has secured from a Natixis NPL. Last May, Natixis sold the partly out-of-the-money B-Loans, secured by the 21-strong ‘Jupiter’ portfolio, formerly owned by Moises and Mendi Gertner’s Fordgate.
CoStar News understands that KWE paid around £37m for the £119m B-Loans from lenders, including French investment bank Natixis, which put the listed investment management firm in a strategic position ahead of competitors to acquire the direct property portfolio out of receivership.
More recently, last week KWE completed the purchase of LinkedIn’s European headquarters, Gardner House in Dublin city centre, for €45.0m after converting a loan from Deutsche Bank’s Project Spring non-performing loan (NPL) portfolio into direct ownership.