Hong Kong-based Far East Consortium, a frequent buyer of UK real estate, has turned seller with its latest deal by agreeing to offload a City of London hotel for £115 million ($160.4 million).
FEC expects to record a gain of about £50 million from the sale of the Dorsett City London Hotel, the company said in a Tuesday press release.
The buyer is a company controlled by two New York-based investment firms, Highgate Hotels and Cerberus Capital Management.
Upon completion of the transaction, FEC’s wholly-owned DHI Hotel Management UK will enter into an agreement to provide management services for the four-star, 267-room hotel at 9-13 Aldgate High Street, a five-minute walk from the iconic Gherkin tower.
The net proceeds from the sale will be used for general working capital. FEC said the deal would let the group realise the value of the hotel, recycle capital, increase liquidity, reduce leverage and reap income from management fees as the hospitality sector stabilises post-pandemic.
The year ending March 2021 saw passenger arrivals in the UK plunge 87 percent to an estimated 18 million as COVID-19 disrupted travel, according to British government statistics.
“We look forward to exploring new opportunities to deploy capital at attractive rates of return,” said FEC managing director Chris Hoong.
Five hotel transactions in London so far in 2021 are estimated to have been worth $283 million, the South China Morning Post reported, citing data from Real Capital Analytics.
As of 30 September 2020, FEC operated 31 hotels with 8,100 rooms in Hong Kong, mainland China, the UK, Australia, Singapore, Malaysia, Germany, Austria and Czechia. The group has 13 hotels in the development pipeline, including a Ritz-Carlton in Melbourne.
When all the hotels in the pipeline become operational, the group will own 44 hotels with 11,350 rooms, FEC said.
The real estate firm helmed by second-generation tycoon David Chiu has been active in Britain’s property market, including with last year’s £28.25 million acquisition of a waterfront site in London’s Canary Wharf for development of a residential-led mixed-use complex.
In 2019, FEC acquired a 20 acre (8 hectare) residential plot in central Manchester to bring its land investment in the northern England city to more than £30 million since 2017 and boost its development pipeline to 3,800 homes.