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Malmaison owner to sell and leaseback four hotels

1 commentBy Emma Eversham , 20-Jul-2011
Last updated the 24-Aug-2011 at 14:14 GMT

Related topics: Business, Venues, Hotels

Malmaison owner MWB has exchanged contracts to sell and leaseback four of its hotels which it says will enable it to reduce its debt levels without affecting the future operations of the group.

Malmaison in Manchester is one of the four hotels MWB will sell and leaseback

Malmaison in Manchester is one of the four hotels MWB will sell and leaseback

Under the deal, which earns MWB £86m, Malmaison properties in Birmingham, Newcastle and Manchester have been sold to Legal and General Property Limited. The fourth hotel in Charterhouse Square, London, was sold to DEKA Immobilien GmbH.

In a statement MWB said the proceeds would go towards reducing the group's £272m debts.

"In light of the stated intention of the Board to reduce debt levels, management has concluded that these transactions will be an advantageous way for the group to significantly reduce indebtedness without compromising the operations of the group," it said.

"Following the transactions Malmaison will retain its robust asset backing, with 80 per cent of its 26-stong Malmaison and Hotel du Vin branded hotel portfolio (by number) being freehold or long leasehold."

Operational impact

The day-to-day operations of each of the four hotels are not expected to be affected by the deal, which will see MWB enter a 70 year lease term on each property with their owners.

MWB will pay £6m in rent across the four hotels in the first year and rent reviews will happen every five years.

MWB chief executive Richard Balfour-Lynn said: "I am pleased that we have made great progress along the path towards achieving more suitable debt levels within both Malmaison and the Group. We are fortunate to have the confidence of such strong institutions that recognise the outstanding long term prospects of our hotel businesses."

Expansion

In an interview with BigHospitality two weeks ago Robin Cook, chief executive of Malmaison and the Hotel du Vin Group, had hinted that the group may look at sales and leasebacks on properties to raise capital for potential expansion overseas.

Cook also said Malmaison had been looking at properties in the States for potential growth, although would wait for the end of the recession before it made any move to expand.

He said: “Malmaison is in locations where we need it to be in the UK and we need to take it overseas now. I think the brand will do well in America either as a conversion brand or new build, and if we go there we’ll go for secondary cities like the Austin, Houston or Atlanta rather than New York or Chicago.”

1 comment (Comments are now closed)

Shock

I'm absolutely astounded that with the cost of money today and the experiences of a variety of companies (Southern Cross & Woolworths spring to mind) that MWB should be contemplating such a short sighted move.

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Posted by Paul Thompson, Finance Broker
22 July 2011 | 16h41

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