8th May 2024 13:56
(Alliance News) - Land Securities Group PLC on Wednesday said it had sold its entire hotel portfolio for around GBP400 million, while noting it has sealed GBP217 million worth of non-core asset disposals since September.
The London-based commercial property developer and investor said it sold its hotel portfolio to real estate funds managed by Ares Management Ltd, alongside operating partner EQ Group Ltd.
Landsec said the disposal compares to a GBP404 million book value for the hotel portfolio in September last year.
Of the total consideration, GBP350 million has been received on completion with the remaining GBP50 million payable within 24 months.
Landsec will receive 6% interest per year on this outstanding balance, which is ahead of the company's marginal cost of borrowing. The net proceeds of the sale will initially be used to repay debt, Landsec said.
It also said the sale was in line with its strategy to "release capital from sectors in which the company does not have scale and to focus its resources on areas where it has genuine competitive advantage".
The company said the hotel portfolio, which comprises 21 assets, is fully let to AccorInvest and generated net income of GBP28.4 million over the company's last reported financial year.
Landsec also reported completing the disposal of GBP217 million of other non-core assets across numerous transactions since the end of September.
It said these disposals included its two smallest retail outlets, one retail park, and two leisure assets and a local shopping centre in London. The combined consideration was in line with the September 2023 book value of these assets.
"We said in late 2020 that our focus would be on areas where we have a genuine competitive advantage. In line with that strategy, we have continued to recycle capital out of assets where our ability to add further value is limited," said Chief Executive Officer Mark Allan.
"The sale of our hotel portfolio and other non-core assets will further strengthen our balance sheet and leave us well placed to take advantage of opportunities in the market as they arise."
Shares in Landsec were up 0.2% to 688.00 pence each in London on Wednesday afternoon.
By Greg Rosenvinge, Alliance News senior reporter
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