Aareal finances Henderson Park’s £500m UK hotel debut

Aareal’s loan has a term of seven years and reflects a loan-to-value ratio of 66%.

Germany’s Aareal Bank has provided a £330 million (€375 million) senior financing of London-based investor Henderson Park’s debut deal in the UK hotel market.

The loan supports the firm’s £500 million acquisition of the London and Birmingham Hilton Metropole hotels, which it has now completed. In August, Real Estate Capital’s sister title PERE reported that Henderson Park was closing in on the purchase, following investments into the Paris and Athens hotel sectors.

Aareal’s loan has a term of seven years and reflects a loan-to-value ratio of 66 percent.

In its previous hotel investments, Henderson Park bought Le Méridien Étoile, the largest hotel in the French capital, last November for around €365 million. French bank Natixis financed the deal with a €200 million loan. In June, it bought The Ledra, a five-star hotel in Athens for €33 million.

Nick Weber, the company’s founding partner, has a strong track record in hotel investment, having previously bought and then, in 2015, sold Jury’s Inn hotel group for £680 million in a deal for his previous firm, Mount Kellett, which generated a 90 percent-plus IRR and a 3.25x equity multiple.

Henderson Park plans to complete an asset management programme for the two UK hotels alongside Hilton, which will continue to manage them.

The Hilton London Metropole is located on the UK capital’s Edgware Road, close to the city’s Paddington Station, an access point for Heathrow airport and, from 2018, the new Crossrail rail line. The hotel is London’s largest by delegate capacity and second largest by room count. In total, it has 1,059 bedrooms.

The Hilton Birmingham Metropole is the UK’s largest hotel outside of London, with 790 rooms, and the UK’s largest conference hotel by delegate capacity, with capacity for up to 2,000 delegates. It is located at Birmingham’s National Exhibition Centre and adjacent to Birmingham International Airport.

“The completion of this acquisition brings two significant hotel assets into our portfolio, both of which offer a number of opportunities to further enhance their value through the implementation of a refurbishment and repositioning programme we intend to undertake with Hilton,” commented Weber.

The financing with Aareal is an endorsement of both the assets’ “defensive characteristics” and the business plan for them, Weber added.

Weber launched Henderson Park in September last year after receiving $500 million of backing from Greenwich, Connecticut-based private equity firm Stone Point Capital, sovereign wealth fund Kuwait Investment Authority, and New York and Kuwait-based investment manager, Wafra Investment Advisory Group.