The once-troubled British and Irish hotel chain, Jurys Inn, has become the latest target for American distressed-debt investor Lone Star. The US specialist has paid £680m for the firm’s 31 hotels.
This week’s acquisition follows years of uncertaintly and financial restructuring with the hotel group suffering badly at the height of the property boom.
In 2007 Jurys Inn was bought by a private equity fund masterminded by Irish property investor Derek Quinlan. It paid £791m for the chain, secured on various Irish banks. The following year Quinlan sold a 50 per cent stake to the Oman Investment Fund, one of the fund’s original founding investors. But, as the worldwide markets crashed, Jurys Inn’s debts rapidly soared.
After a £120m post-crisis cash injection — which left the company with £240m in remaining debts — the Royal Bank of Scotland (RBS) acquired a three-way share of Jurys Inn alongside the Omani fund and Mount Kellett Capital, a US investment fund set up by two former Goldman Sachs executives.
In recent years a programme of investments and refurbishment across its British, Irish and Czech Republic hotels has turned around the chain’s business with record trade and profits expected this year. Jurys Inn now employs around 2,000 people across Europe.
John Davison is global head of strategic investment group at RBS. “As an existing lender to a business requiring financial and operational restructuring, we took the decision almost two years ago to support the business when it was most needed, becoming both a new shareholder and a new lender to Jurys Inn,” he explained.
“We are delighted to see that a combination of new capital and active management of the business has resulted in a successful turnaround and growth story,” Davison said. “We also appreciate the efforts of the management team, the employees and our fellow shareholders and lenders in being able to deliver this very positive outcome.”
Lone Star’s acquisition comes at the end of what many analysts see as an aggressive period for the US investor’s Irish office. It has been looking for hotel assets to add to its European portfolio, and last year bought Puma Hotels, since rebranded as The Hotel Collection. Lone Star also recently purchased a €650m (£486m) loan book from Allied Irish Banks and corporate loans from the liquidators of the Irish Bank Resolution Corporation.
For Mount Kellett, whose Europe office is led by another former Goldman Sachs executive Nick Weber, the hotel sale marks its second successful investment exit in three months.
Last November, the fund reportedly earned three to four times it initial investment when it sold two tranches of junior loans secured by London’s CityPoint tower for £70m to Brookfield Office Properties.
“Prior to its acquisition less than two years ago, Jurys Inn was burdened by excessive debt and faced an uncertain future,” commented Nick Weber. “The investor group brought fresh capital, restructuring expertise, and a focused strategy to help transform the company into one of the leading mid-market hotel groups in the UK and Ireland.”
