Kennedy Wilson buys Park Inn hotel loans

Kennedy Wilson Europe Real Estate has bought loans held against eight Park Inn hotels across the UK for £61.5m reflecting a gross yield of 9.3%.

The loans were sold by Natixis and taken out by two Danish investor groups.

The assets are in Northampton, Lakeside in Thurrock, Telford, Bedford, Harlow, Birmingham, Nottingham and Cardiff. They total 1,107 rooms and are let to Rezidor Hotel Group until 2030.

The hotels were bought in 2006 and 2007 for £131.5m and the total unpaid balance on the loans is £99.8m, reflecting a 38.4% discount on Kennedy Wilson’s purchase price.

Mary Ricks, president and chief executive of Kennedy Wilson Europe, said: “The purchase of the Park Inn loans is a classic KWE deal that capitalises on the synergies between our real estate debt and property professionals. This transaction gives us further exposure to the fast improving UK hospitality sector and a high quality covenant that we look forward to actively engaging with to identify various resolution strategies and asset management opportunities to enhance the value of our investment.”

Kennedy Wilson’s portfolio now stands at over £1.9bn following its £1bn IPO a year ago. The purchase is its third in the hotel sector having bought the Portmarnock Hotel in June last year for £24.2m and the Fairmont Hotel in St Andrews for £32.4m last August.

It is also the second time the company has bought a loan from Natixis as a way in to owning the underlying asset. Last year Kennedy Wilson bought Natixis’s B loans secured by Fordgate’s ‘Jupiter’ portfolio before buying the whole portfolio from receivers.