The De Vere empire has now been fully broken up, with United States private equity company KSL Capital Partners acquiring the final piece of the hotel group — the 28 property De Vere Village chain — for £480m.
A former FTSE 100 listed company, De Vere says it is confident that “a well-progressed asset sell-off” has allowed it to pay off its billion-pound bank debt or, if the disposals do not complete, agree a new repayment schedule. Loans of more than £1.1bn with Lloyds are due for repayment by 30 June, 2015.
In March, the business sold its venues division to Starwood Capital, with the £232m raised going towards the bank debt. The group has also offloaded other assets, with the £50m April disposal of the historic Grand Hotel in Brighton (pictured) its highest profile sell-off.
Last month De Vere sold six of its hotel and leisure complexes to the Boston-based investment bank Bain Capital, through its affiliate Sankaty Advisors, for a total of £160m.
Now — after a bidding contest that included Hong Kong’s Great Eagle Group, owner of the Langham group of hotels — De Vere’s entire Village portfolio has gone to KSL Capital. There are currently 25 Village Urban Resort sites around the country, with three more soon-to-be-opened Scottish hotels in Aberdeen, Edinburgh and Glasgow.
At the height of the recession De Vere, which started life as brewers Grenalls, came under severe financial pressure with the decline in international visits to Britain. Its business was effectively taken over by the Lloyds Banking Group, in which the taxpayer has a majority stake, as part of a £1.7bn debt-for-equity deal in 2010. Since then Lloyds has written off £670m.
If the estimates of this year’s sale prices are accurate, the entire empire has been sold for approximately £922m, more if ancillary and minor sales are added, and more than enough to keep Lloyds happy.
Commenting on the latest sale De Vere’s chief executive, Andrew Coppel, said: “Village Urban Resorts is now in great shape and has forward momentum. Its future is positive, undoubtedly enhanced by KSL’s commitment to invest substantially in the existing portfolio and pipeline.”
He praised Lloyds Bank for showing the patience to enable the group to execute its strategy in more favourable market conditions. “To generate over £1bn of sale proceeds in challenging market conditions reflects well on the team. It represents a vindication of our strategy and the Lloyds Bank’s confidence in the company.”
Mark Rajbenbach is a real estate partner at business consultancy Paul Hastings. He said this year’s De Vere sales were growing evidence in the strength of the UK hotel and leisure market. “All the usual suspects are competing for these portfolios, which shows a continued appetite for deals at this level of finance,” he added.
“I assume that at one point Lloyds was prepared to sell everything in one lot, but it appears it has received better value by breaking it up into respective pieces — there certainly was no shortage of takers.”
Previous Post
Government invests £5m in Sensor City Hub
