London Olympic hotels sold to Asian

Hotels sold for GBP58m to an Asian buyer, only eight months after they opened

Gulf News

The two hotels built for the London Olympics in Westfield shopping centre have been sold for £58 million (Dh348 million) to an Asian buyer, only eight months after they opened.

Patron Capital, the European private equity company, paid Westfield just under £50 million in January 2011 for the hotels at the gateway to the Olympic Park.

Branded as Holiday Inn and Staybridge Suites, they opened in May on a single 186,000 sq ft site, with a combined 350 rooms, plus restaurants and conference space.

Patron declined to identify the buyer, who is understood to be an owner of international hotel brands in Asia. It said the deal was worth £165,000 per room and had a 2013 capitalisation rate of 6.9 per cent. The capitalisation rate is calculated by dividing the asset’s income after costs by the total value of the asset.

Josh Wyatt of Patron said it had envisaged owning the hotels for between five and seven years but changed its mind after they attracted unsolicited offers during the summer. He said the unsolicited interest prompted Patron to invite formal bids.

InterContinental Hotels Group, whose brands include Holiday Inn and Staybridge, will continue to hold the franchise deals for the hotels. They are managed by Cycas Hospitality, set up by John Wagner who previously helped IHG roll out the Staybridge brand of extended stay hotels outside of the US.

Wyatt said the sale was testament to the growth prospects of Stratford in a short period of time.

“We closed the transaction [to buy the hotels] at the end of 2010. There was nothing over there. We felt the area would take quite a bit of time to mature,” said Wyatt.

“We thought it would take three to four years to establish a trading history. The hotels have outperformed expectations in terms of the business plan.”

The Stratford area was now benefiting from a series of deals bringing in capital investment from institutions into east London, he added.

These include the purchase of the 320,000 sq ft Stratford Centre, by joint venture partners Blackstone and Catalyst Capital, and that of the International Quarter, a £1.3 billion office and residential project, by Lend Lease and London & Continental Railways.

In addition, University College London is developing plans for a 23-acre Stratford campus next to the Olympic Park and telecom BT is renting space in the buildings built to house the Olympic media centre for its forthcoming sports channels.

Wyatt said: “With the arrival of Westfield Stratford City and the Olympic Park, followed by the ongoing investment in the area, these hotels are now in an internationally recognised location and at the centre of significant facilities for retail, business and the community.”

Patron has an investment fund with 2.4 billion of capital in property and other assets, including 44 hotels. It was behind the rebranding of Jarvis hotels as Mercure, and owns the Luxury Family Hotels portfolio. It also owns Powerleague, the five-a-side football operator. Its investors include universities, institutions, private foundations and wealthy individuals.