The sale of 42 Marriott International properties in the UK, controlled by the Royal Bank of Scotland (RBS) Group, is in advanced stages, according to banking sources.
Without disclosing the terms and the time frame of the deal, a banking source told Gulf News that the sovereign wealth fund, Abu Dhabi Investment Authority (Adia), is the prospective contender for the deal, estimated at approximately £640 million ($992 million).
Adia spokesperson, Erik Portanger, however, declined to comment.
RBS acquired the Marriott hotels across England, Scotland and Wales in 2011 after the borrowers de
faulted on a loan, according to a recent Times of London report. The UK publication also reported earlier that Adia and Qatar Investment Authority were the two bidders for the hotels.
Commenting on the deal, a Marriott spokesperson told Gulf News: “We are the operator of hotels throughout the UK. Any transaction between the current owners and any future owners is a matter between them and as the hotel management company, we would be notified in due course.”
Commenting on what the sale would mean for RBS, a banking source said: “It is a significant sale of non-core assets which the bank has committed to exit as part of its strategy.”
In what seems like a win-win for all parties involved, consultant Peter Goddard, Managing Director of TRI Hospitality Consulting, said: “On one hand, Marriott will have a significant cash injection and will continue to operate the hotels with favourable commercial terms. On the other hand, Adia will gain a significant hotel portfolio which has the potential for capital growth with an attractive yield. RBS has the opportunity to reduce their financial exposure and if they remain involved, restructure the deal with more attractive terms.”
Going forward, industry experts expect more such deals to take place in the region’s hospitality sector. “You will see more deals like this in the future particularly as there has been a trend for operators to sell asset stock and for sovereign wealth funds to acquire a stake in solid long term investments. The hospitality sector will be perceived as a more stable real estate class,” said Goddard.
Echoing his view is Elizabeth Winkle, Managing Director of STR Global. “We believe in hotels as long-term investments and it comes as no surprise that a strong portfolio with a respected operator would attract investors such as sovereign wealth funds,” she told Gulf News.