INTERNATIONAL REPORT—In a $1.1 billion deal, Foncière des Régions (FdR) has agreed to purchase a portfolio of 14 U.K. hotels that form part of The Principal Hotel Company from a controlled affiliate of Starwood Capital Group. In a separate agreement, FdR has partnered with InterContinental Hotels Group (IHG) to rebrand and operate 12 open hotels and one pipeline hotel.
The purchased portfolio consists of 14 full-service hotels comprising 2,638 rooms and split across two distinct landmark brands, Principal (12 hotels) and De Vere (two hotels). The properties occupy flagship locations across the U.K., including London, Manchester, Edinburgh, Glasgow, Oxford, York and Leeds. Included in the portfolio are The Principal London and The Principal Manchester, two of the most notable and historic hotels in the U.K., according to the company.
“This landmark transaction represents a major milestone in our remarkable journey with The Principal Hotel Company,” said Cody Bradshaw, managing director and head of European Hotels for Starwood Capital Group. “Five years ago, we embarked on an investment strategy aimed at consolidating more than 50 hotels across four different U.K. hotel companies to form a leading platform. With this sale to Foncière des Régions, we will have realized 35 asset disposals in total since our acquisition. As long-term institutional investors, Foncière des Régions are extraordinary custodians of real estate and we could not be more thrilled to pass them this iconic collection of assets.”
The Principal Hotel Company includes many of the properties that Starwood acquired through the purchase of Principal Hayley in 2013, Four Pillars and De Vere in 2014, and the Townhouse Collection in 2015, and the subsequent combination of the four portfolios. The company has invested significant capital into the portfolio in recent years to reinvigorate the properties and relaunch the Principal and De Vere brands to the market.
Eastdil Secured and UBS served as advisors on the transaction.
IHG to Manage
The agreement with IHG will expand the brand company’s presence and enable it to launch its luxury boutique brand, Kimpton Hotels & Restaurants in the U.K. It will also strengthen IHG’s position in the upscale segment in the U.K., and will establish a presence for its new upscale brand, which will be launched later this year. The brand, principally focused on conversion opportunities, will capitalize on the significant opportunity IHG has identified to offer consumers an informal but differentiated experience in the upscale segment, while offering owners a strong return on investment, according to the company.
“We are focused on continuing to expand our leadership in luxury and upscale, which are both high-value segments with significant growth potential,” said Keith Barr, IHG’s CEO. “Bringing Kimpton to such an important market as the U.K. is a key part of our plans, as is the introduction of our new upscale brand, which will provide an exciting, differentiated offering to both guests and owners. Together with the recent addition of Regent Hotels & Resorts to our portfolio, we are building real momentum behind our plans to deliver industry-leading net rooms growth.”