Landsec to divest hotel portfolio to Ares for over £400m – reports

Landsec is nearing completion of a deal worth over £400 million to divest its portfolio of 21 hotel assets to Ares Management, according to React News.

The real estate investment trust (REIT) is reportedly engaged in negotiations with the private equity company to offload 21 properties — comprising 3,766 rooms and managed under the Novotel and Ibis brands — currently leased to AccorInvest until 2091, with a break clause every 12 years. The next break is not expected until around 2030.

Ares is believed to be partnering with AccorInvest on the deal, which had a pre-emption option over the proposed sale of the portfolio. Accor sold the portfolio to Landsec in 2007, which at the time included an additional nine hotels, for €711 million.

Back in 2021, Landsec was previously reported to be looking to offload its hotel assets.

The most valuable assets in the portfolio include the Novotel London West in Hammersmith and the Novotel London Tower Bridge. Landsec's annual report revealed that the hotels had a 92% occupancy rate in March 2022. Other hotels in the portfolio include Ibis London Heathrow, Novotel Leeds Centre, Ibis Manchester Portland Street and Novotel Glasgow Centre.

Hospitality Investor has approached the parties for comment.

Why it matters

This £400m+ deal demonstrates significant interest in the sector, a positive sign after a 2022 which saw lower levels of sizeable asset transactions. Some sizeable hotel deals have already transacted at the start of 2023, with over £230 million of investment.