The acquisition, the second for Benson Elliot in the UK following the purchase of CBXII in Milton Keynes in late March, was made on behalf of Benson Elliot Real Estate Partners II, L.P. The fund now holds a broad portfolio of investments in the UK, France, Germany, Spain, Scandinavia, and Central Europe. Benson Elliot Real Estate Partners III, L.P., a €505 million equity fund closed last year, will begin investing in the second half of 2010.
Following six acquisitions in the past 18 months, the Novotel Edinburgh Park will become the 23rd hotel in Algonquin’s portfolio and is its first investment in the United Kingdom.
Novotel Edinburgh Park opened in mid-2008, and was purpose built to meet the standards of the new generation 4-star Novotel brand. The hotel comprises 170 rooms, a restaurant, meeting rooms and a leisure facility (including a swimming pool). It is the only hotel situated within Edinburgh Park, one of the UK’s premier office business parks, which is located near Edinburgh Airport and the city bypass and provides office accommodation to over 9,000 employees and many of the UK’s leading companies. Accor will continue to manage the hotel under the Novotel brand. The acquisition was financed by Barclays Corporate.
Trish Barrigan, Senior Partner at Benson Elliot, commented: “The global recession and subsequent property market decline have created the opportunity to buy hotels at meaningful discounts to replacement cost and, we believe, at or near the bottom of the operational cycle. We’re actively looking at similar opportunities that represent good value today, but where there is also scope to add value through targeted capex spending and proactive management strategies.”
Jean-Philippe Chomette, CEO of Algonquin, added: “Novotel Edinburgh Park is a good quality hotel in a strong and resilient market. The asset will benefit from the already evident recovery of the hotel market in Scotland, and the arrival of the tramline next to it in the next few years as well as Algonquin’s track record in successfully managing hotel assets. We would be very pleased to contemplate other similar opportunities in conjunction with Benson Elliot across Europe in the future.”
Jonathan Wright, Relationship Director, Barclays Corporate, concluded: “This is an excellent example of a transformative acquisition, returning a well located property back to full operation.”
Mayer Brown, CMS and Brodies acted for Benson Elliot and Algonquin and Dundas & Wilson and Jones Lang LaSalle Hotels acted for KPMG.