Quinlan Private and Igal Ahouvi Group (IA) have completed the €1.6 billion purchase of a 47-hotel chain in Britain operated by the Marriott group. Quinlan Private has a 44 per cent stake in the purchase, with IA taking 56 per cent on behalf of a consortium of international investors.
The four- and five-star hotels, which include the London Marriott County Hall hotel, were bought from the Royal Bank of Scotland.
Quinlan Private itself will co-invest along with its clients and will have a 5 per cent interest in the hotels. It will be the single largest investor in the portfolio.
The investment and advisory group expects the annual yield (eg rental income, after finance costs and fees) to be 6.5 per cent a year, but hopes to improve on this through its active management of the properties. It is envisaged that there will be an annual distribution to investors, who could expect to see their capital repaid within seven years.
The deal is a joint venture with IA. Quinlan Private has a long-standing relationship with IA and other Israel-based investors through its central European operations.
The partners were not in competition for the deal. "It was something we decided we wanted to do together," said Olan Cremin, chief executive of Quinlan Private.
It is understood the deal will be roughly 35 per cent funded by equity, with the balance being in the form of debt. Quinlan and IA will have to put up about €350 million in cash.
About 40 per cent of the clients investing in the deal are UK-based. The rest is a mixture of Irish and other clients, it is understood. The hotels are managed by Marriott, which has them on a 30-year lease. Quinlan will be responsible for the longer-term strategic management of the properties, such as investment and redevelopment.
Quinlan sees this area as a very significant step for the business.
"It's not just about buying buildings now. It's about moving up the value chain," said Mr Cremin.
It is also the first significant deal involving Quinlan Private's London office.
IA is an international real estate investor and is investing on behalf of its clients, who include Electra, First International Bank of Israel and Delek Real Estate.
As part of the terms of the transaction, Quinlan Private and IA will jointly control all decisions, with Quinlan Private leading the asset management function.
The 30-year management agreement with Marriott Hotels to run the hotels was signed in 2006. The hotels are based in England, Scotland and Wales.
"We are acquiring premium-quality hotel sector assets in an economy which continues to show good growth," said Peter Donnelly, partner with Quinlan Private.
"We see significant opportunity to enhance operating performance together with the Marriott group."
Quinlan Private was established a number of years ago by Derek Quinlan and has grown into a significant international private equity real estate group with total assets under management of €9 billion.
It acts as a principal and adviser in originating, structuring, financing, developing and managing a diversified portfolio of assets.
Its hotel assets include the Four Seasons hotels in Dublin, Prague and Budapest, the Maybourne Group in London, and Targa Hotels in central Europe.
Apart from luxury hotels, the group's assets also include commercial office blocks, retail properties, shopping centres, car parks and residential/ commercial developments in North America and Europe.
Quinlan Private's London office has a transaction team and a private client team.
