MIAMI—A controlled affiliate of Starwood Global Opportunity Fund XI has acquired a portfolio of seven Hilton hotels throughout the United Kingdom, totaling more than 1,300 rooms, from Park Hotels & Resorts for about $188 million.
The portfolio consists of the 188-room Hilton London Islington; the 173-room Hilton Bath City; the 184-room Hilton Edinburgh Grosvenor; the 198-room Hilton Belfast; the 278-room Hilton Blackpool; the 138-room Hilton Milton Keynes; and the 175-room Hilton Coylumbridge.
Starwood Capital Group plans to refurbish a number of the assets in order to transform operating performance and enhance asset values, with the portfolio being managed by Kew Green under franchise agreements with Hilton. This marks the second acquisition in 12 months in which Starwood and Kew Green have partnered, following the acquisition of the 298-key Holiday Inn Manchester in April 2017.
“We are acquiring this well-located portfolio at a substantial discount to replacement cost and with significant upside potential still to be realized,” said Jon Asumendi, VP at Starwood Capital Group. “We look forward to investing in these properties alongside Kew Green and leveraging Starwood Capital Group’s hospitality expertise to maximize portfolio performance and investment returns.”
In addition to the seven-hotel portfolio, Park Hotels & Resorts has also divested four additional properties—a portfolio of three Embassy Suites hotels and one South African hotel. Together, the sales have garnered total gross proceeds of $317 million, equating to $136,000 per key across three separate transactions. When adjusted for Park’s anticipated capital expenditures of $123 million for the 11 hotels, the proceeds represent a 5.7% capitalization rate on the portfolio’s projected 2017 net operating income (7.9% excluding CapEx), or 14.8x the portfolio’s projected 2017 EBITDA (10.7x excluding CapEx).