Three of America’s biggest hotel investors are understood to be among the second-round bidders in the £450 million-plus auction of De Vere Group’s Village Urban Resorts chain.
Blackstone Group, Starwood Capital and KSL Capital Partners are believed to be on a shortlist of four or five suitors that is also said to include Queensgate Investments, a London-based property investor.
According to well-placed sources, the auction of the 25 Village hotels, which is being handled by JPMorgan Cazenove, attracted about 20 bids. A dozen were deemed to be “credible offers” in terms of price and funding.
The highest offer is understood to be have been pitched at £470 million, with all the shortlisted parties said to have lodged bids of £450 million or more.
Analysts cautioned that the first-round bids had been based on limited financial data, suggesting that detailed due diligence could push the price down, particularly given recent mixed trading.
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According to one bidder, Village is forecast to deliver underlying earnings of £36 million, implying a multiple of 13 times’ earnings at the top end of the bidding range, although that does not include three sites under construction in Aberdeen, Glasgow and Edinburgh.
The shortlisted bidders are each significant investors in the hotel and leisure sector. Blackstone’s biggest investments have included Hilton Worldwide and Center Parcs, while Starwood Capital was the buyer for De Vere Venues.
KSL Capital Partners, a big investor in American golf resorts, owns The Belfry, the Ryder Cup venue near Birmingham, and last year paid £200 million for the Malmaison and Hotel du Vin chains. Queensgate is backing the development of a luxury InterContinental hotel near the O2 arena in east London.
Other suitors to have run a slide rule over the business, which is the final piece of the De Vere jigsaw to be sold off by Lloyds Banking Group, have included TDR Capital, Hugh Osmond’s Sun Capital Partners, Starwood Hotels & Resorts and Whitbread.
A sale of the Village brand, which is based around health and fitness facilities, would bring down the curtain on one of the biggest parts of the disastrous portfolio of loans and investments made by HBOS, which Lloyds bought at the height of the banking crisis.
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De Vere, formed from the former Greenalls brewing empire, went through a £650 million debt-for-equity swap in 2010 to reduce its £1.7 billion debt. Since then, its businesses have gradually been sold, including G&J Greenall, its distillery; city hotels, including The Grand, in Brighton; De Vere Venues, its conference and training centres, and six De Vere golf resorts.
None of the parties involved would comment or could be reached for comment.