A total of £1.62 billion of UK hotels were sold as a result of company administrations or administrative receiverships between 2010 and 2013 year to date according to latest research by Jones Lang LaSalle’s Hotels & Hospitality Group.
2013 is already the most active year in terms of administration or administrative receivership related UK hotel sales, owing to the sale of the 42 in the Marriott portfolio. The second most active year to date for distressed hotel sales was 2011, with assets in excess of £542 million being sold by companies in administration or administrative receivership.
George Nicholas, Executive Vice President with Jones Lang LaSalle’s Hotels & Hospitality Group comments:
“The process of bank deleveraging is quickening and we are already experiencing a record year of administration led transactions in 2013, a level which is significantly higher than the total of £542 million sold in 2011. As banks are speeding up their deleveraging process, the pricing gap has closed which has resulted in an increase in transaction volumes.”
With 2013 already positioned as the most active year to date in terms of administrative related sales, research indicates that since 2010 the market has witnessed an increase in transaction volumes whereas price per key has lowered. This is a result of banks speeding up their deleveraging process, and pricing becoming more realistic.
During 2013, Jones Lang LaSalle predicts an increase in non-performing loan note sales as banks explore alternative methods to deal with their loan books. George Nicholas concludes:
“Lone note sales will lead the deleveraging process, however, we expect corporate and property specific administrations to continue to accelerate. 2005 through 2007 saw approximately £17.7 billion in aggregate UK hotel transaction volumes and it is the maturing of the debt which was lent on these deals that will trigger the opportunities.”
Jones Lang LaSalle
• Jones Lang LaSalle’s Hotels and Hospitality group were the most active advisor of distressed UK hotel transactions between 2010 and 2013 year to date. Since 2010, the company advised on a total of £764.8 million of distressed UK hotel transactions, representing a 47% market share.
• The Jones Lang LaSalle global loan sales team have transacted on approximately £7 billion of hospitality loans since the beginning of 2011 in the USA and Europe.