Luxury Hotel Sales Test Investor Appetite As Tax Debt Looms For Investor
Two high-end London hotels likely valued at more than £150M have been put up for sale, in a transaction that will test the appetite for hotel assets in a market of increased interest rates.
Shiva Hotels has put the five-star Guardsman hotel near Buckingham Palace and the Lincoln Plaza hotel in Canary Wharf up for sale, Bloomberg reported. JLL is handling the sale of the Guardsman. Gerard Nolan & Partners is handling the sale of the Lincoln Plaza.
Shiva Hotels Group, a company related to Shiva Hotels, is facing a winding-up petition from HMRC, Bloomberg said, citing public court records. PwC is also supporting the winding-up petition over an unpaid bill.
Court proceedings have been deferred until September to allow for the sale of assets to repay bills, Bloomberg said.
The company is “working closely with relevant parties to continue and ensure we meet our financial obligations and on such agreed upon payment terms,” it said in an emailed statement to Bloomberg. “All parties involved are confident in the terms of the agreement and we continue to be engaged in ongoing conversations and partnership with the relevant entities as our industry continues to rebound from the effects of the pandemic.”
Companies House documents show that special-purpose vehicles with links to the two hotels have at least £85M of debt secured against them, which is registered as still outstanding.
UK hotel investment volumes dropped 46% to £450M in the first quarter of 2023, the last period for which data is available, according to figures from BNP Paribas Real Estate.
Operational performance of UK hotels is strong, BNP said, with both occupancy and revenue per available room above 2019 levels.
But that has not been enough to offset the rise in interest rates that has caused stasis in every sector of real estate capital markets. Furthermore, the need for hotels to hit minimum energy-efficiency standard regulation means investors are factoring in increased capital expenditure when making offers for assets, and vendors are not willing to sell at these levels.
