By: The Times
A group of four luxury hotels in London are to be sold in a deal worth almost £1 billion in which the properties will be rebranded under the five-star Leonardo flag.
The Times has learnt that the Grange hotels in the City, Holborn, St Paul’s and Tower Bridge with a total of 1,300 rooms are being sold to Queensgate Investments, the owner of the Generator hostel chain and the 906-room Kensington Forum hotel.
The sale, on which HFF Securities has been advising, is said to have elicited interest from a number of international property investors and sovereign wealth funds, with a joint bid from CBRE Global Investors and Aprirose understood to have been the underbidders.
The four properties are being sold by the billionaire Matharu family, who first started reviewing strategic options three years ago. The protracted nature of the process is understood to have been due to a combination of a family dispute and, more recently, Brexit uncertainty.
Queensgate is a partnership between the Kow family, LJ Partnership and Peterson Group and has about £2 billion of assets under management. It paid €450 million (£384 million) for Generator and about £400 million for the Forum.
Jason Kow, Queensgate’s founder and chief executive, admitted that completing the deal had been “an odyssey”, with Brexit and the Matharu family dispute making it “longer and more complicated”.
Once the sale of the four Grange hotels goes through they will immediately be leased to the operator of the Jurys Inn and Leonardo Hotels brands in a back-to-back deal. They will be rebranded under the luxury Leonardo flag.
The Jurys and Leonardo brands are controlled by Fattal Hotel group, an Israeli group that operates almost 200 hotels in 17 countries, including the Midland Hotel in Manchester and the Grand Harbour Hotel in Southampton.
Grange Hotels was established almost 30 years ago by the Matharu brothers, Raj, Harpal and Tony, who started out by converting empty office space into hotels and had the idea of offering secure women-only wings. In addition to the big four central London hotels, Grange has 12 smaller hotels in the capital and one in Berkshire. It is understood that the smaller hotels will be split between the brothers, with six properties in Bloomsbury expected to come on to the market shortly with an estimated £120 million price tag.
The three brothers, who are listed in The Sunday Times Rich List as having a personal fortune of £1.3 billion, are reported to have put the big four up for sale because they are all approaching retirement age. Harpal is 62, Raj is 61 and Tony is 58.
The Times understands, however, that the main reason for the decision to sell is a longstanding and increasingly bitter dispute between the brothers that has resulted in protracted litigation.
Accounts for Globalgrange, the parent company, show that it made a turnover of £133.2 million in the year to the end of March 2018, slightly ahead of the previous year, but pre-tax profits slipped from £33.1 million to £30.1 million. It had a year-end book value of £1.22 billion, although the total value of the brothers’ assets, including hotels under development and other properties, is understood to be closer to £1.6 billion.
The accounts note that after the end of the financial year the group undertook “a major reorganisation to add flexibility for the shareholders and establish a more appropriate platform for future trading”.