Quinlan Private, the investment vehicle of Dublin financier Derek Quinlan, has emerged as the biggest individual shareholder in a £1.1 billion (€1.63 billion) buyout of the 47 British hotels in the Marriott International chain.
In the first big international deal of the year by an Irish business, sources said Mr Quinlan's firm had agreed to take a stake of 45-50 per cent in the portfolio of hotels that it will acquire from Royal Bank of Scotland with four Israeli groups: Delek Real Estate, Electra Real Estate, FIBI Investment and Dorea Investment & Developments.
The deal will rank among the most expensive overseas purchases by an Irish group. More than £200 million of the consideration will be paid upfront, so Quinlan Private will be sourcing as much as £100 million from clients when it syndicates the deal.
Former Halifax Bank of Scotland banker Pauline Bradley led the deal for Quinlan Private.
She is based in the firm's London office, suggesting the transaction will be syndicated to international clients. This is in line with efforts by Mr Quinlan, a former tax inspector, to broaden the base of his rapidly expanding business.
A noted hotel investor, Quinlan Private famously bought out the prestigious Savoy chain in Britain in 2004 for £750 million. The latest investment is likely to be sold to clients as an opportunity to gain annual yields significantly in excess of the industry norm of 4-5 per cent.
The bulk of the consideration price will be funded by some £856.1 million in long-term debt. The financing bank, which has not been named, also agreed to provide £62.2 million for investment in the hotels. The bank in question will be entitled to 20 per cent of the profit from a sale of the hotels in the future.
While Quinlan Private's long-term plans for the investment are not clear, the acquirers are likely to conduct a detailed review of the portfolio after they take possession of it in March.
The Marriott International group will manage the hotels under a 30-year deal, with an option to extend it for another 10 years. With a total of 8,456 rooms, 39 of the hotels are in England, five are in Scotland and three are in Wales.
Delek has indicated that it expects annual income of £78 million from the hotels in the next 10 years. In a notice to the Tel Aviv stock exchange, Delek said it would take a 17 per cent stake in the deal. Electra will buy 9.9 per cent while FIBI is likely to take 5 per cent and Dorea 3 per cent.
Royal Bank of Scotland bought the hotels from Whitbread and Marriott International last April in a deal valued at the time at £951.4 million.
About a fifth of Quinlan Private's assets are in hotels. However, the group has sold hotel assets as well as bought them.
A group led by Quinlan sold the Four Seasons hotel in Milan for €200 million last year. Less than a year after it bought the Savoy chain, the firm sold the Savoy Hotel for £230 million.
The firm made notable retail investments last year. Quinlan Private led the group that bought the Neumarkt Galerie shopping centre in Cologne, Germany, for €170 million last September. In May, it led a group that bought the Diagonal Mar shopping centre in Barcelona for €300 million.
Quinlan Private declined to comment. - ( Additional reporting by Reuters)
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