Quintain announces that contracts have been exchanged regarding the sale of the Plaza Hotel, Wembley, to Sojourn Hotel Group.
The sale price of £15 million (approx. 17.5 million) includes a payment of £1.75 million, deferred for a year after completion, and will deliver a profit against book cost of £3.5 million. The proceeds from the transaction, which will complete in June 2012, will be used to reduce forecast gearing levels.
The original Wembley planning consent, secured in 2004, assumed the redevelopment of the hotel into residential accommodation, which is reflected in the expected September valuation of the Plaza at £16 million.
However, in response to changing markets, Quintain's development strategy for the next two years is to focus on and complete the core leisure and entertainment elements of the scheme, comprising the new four-star Hilton Hotel and the 350,000-ft² London Designer Outlet. The Hilton will open before the Olympics next summer and the London Designer Outlet is on schedule to open in October 2013.
Thereafter, activity will focus on residential elements of the development, including the 1.7 million-ft² North West Lands surrounding Brent's new Civic Centre. The residential consent originally attributed to the Plaza site will be reallocated elsewhere on the 85-acre scheme.
Max James, Director of Quintain, commented: "The disposal of the Plaza Hotel represents the continuation of our strategy of releasing capital from assets where value has been added while creating a vibrant entertainment destination at Wembley.
"Sojourn is a recognized long-term hotel investor and joins Keystone, Barclaycard, Cineworld and PowerLeague as valued partners participating in and benefiting from the regeneration of Wembley.
"The transaction brings the quantum of capital now released from Wembley to £70 million in this financial year, demonstrating further progress against the milestone target of £100 million and contributing to the reduction of forecast gearing levels."
Shiraz Boghani, Chairman of Sojourn Hotels, added: "This acquisition fits with our investment strategy of acquiring assets that provide the opportunity for growth. Quintain's regeneration of Wembley is gathering pace. With the Olympics next year and subsequent opening of the London Designer Outlet at the heart of the scheme in 2013, we believe that we will soon see Wembley transformed into a thriving and dynamic quarter of London."
The Plaza Hotel provides 306 bedrooms and suites, meeting rooms and a gym. The new Hilton will offer 361 bedrooms and suites, a ballroom, sky bar, conferencing facilities and a health and fitness suite, as well as views over the Stadium, Arena and London Designer Outlet.
Source: FTI Consulting