One of the UK’s largest independent hotel groups, Macdonald Hotels, is to sell 27 properties to a private equity firm for an undisclosed sum.
Macdonald Hotels said the deal, set to complete by the end of August, would clear its bank debt, which stands at around £218m, as well as enabling it to invest in the 11 hotels it will retain.
It has already signed heads of terms with the unnamed private equity business to offload a portfolio of prestigious properties, including the Rusacks hotel in St Andrews; the five star Randolph hotel in Oxford, the five star Bath Spa, and the Compleat Angler, on the banks of the River Thames in Marlow.
The 11 properties Macdonald Hotels will hold onto include the Aviemore Highland Resort and four Monument Leisure hotels, as well as a further nine Macdonald Resorts located in the UK and Spain.
The group’s 72 year-old founder and executive chairman, Donald Macdonald, said: “It’s been 30 years since I started the business along with my fellow board members Gerry Smith and Gordon Fraser, and it’s been a privilege to have shared such an incredible journey with both of them and with so many other fantastic colleagues.
“I am extremely grateful to have led a team of talented and hardworking people who have built such a significant business, but it’s now the right time to move onto the next stage of the journey.”
Gordon Fraser, deputy chairman and group managing director, who has worked with Donald Macdonald for 36 years, said: “Over the past three decades, we’ve received numerous offers for the business, and their frequency has increased considerably over the past year, with a steady stream of serious approaches from the Far East, US and UK, including from UK blue-chip pension funds, which reflects the long term strength of the business.
“We therefore appointed Cahal Dowds of Deloitte who successfully led the sale of 24 of our hotels in 2007. Cahal helped us weigh up a reassuringly high number of serious offers of both refinancing and acquisition. We are very pleased to have entered a ten week exclusivity period with a major, heavyweight investor to allow final due diligence and legal work to be completed with the transaction to conclude by the end of August.
“The preferred bidder fits superbly with our ongoing aspirations for the hotels and they will bring significant investment and expansion of the portfolio.”
At the same time as announcing the sale, Macdonald Hotels, which employs 2,200 people within its hotels and another 190 in a central support team, announced a pre-tax loss of £1.1m for the year to 29 March 2018. Fraser blamed the loss on a £6.6m write-down on the value of the Macdonald Crutherland hotel in East Kilbride, Glasgow.
Meanwhile, the firm reduced its bank debt by £12m to £218m and expects that to fall to £190m in July 2019. Its debt had previously been as high as £700m.
The firm added that in this current year, room sales are performing £1.2m ahead of last year, with particular growth from the group’s summer leisure campaign, corporate groups, spa and golf breaks.