Delek Real Estate Ltd. (TASE: DLKR) today announced that it and Blenheim Property Group Ltd., owned by Igal Ahouvi, have signed an agreement for the purchase of 47 UK Marriott hotels under a buy and lease-back deal. The company said its stake in the consortium is 17%, to be held through Delek Belron International Ltd. (TASE:DLKI.B1).
The hotels have 8,456 rooms altogether. Marriott International Inc. (NYSE:MAR) will manage the hotels for 30 years, with an option to extend for ten years. Under the management contract, if Marriott does not meet the results tests set by the parties, the buyers have the right to terminate Marriott’s contract to manage the hotels.
The acquiring companies have secured a long-term loan of ₤856.1 million ($1.7 billion). The financing bank, which was not named, has also agreed to finance up to ₤62.2 million for additional investments in the hotels in the coming years.
External experts hired by the Israeli consortium estimate average net revenue from the hotels at ₤78 million a year over the next ten years. The deal is due to be closed on March 30, 2007, on the basis of the Marriott hotels’ financial results after January 1.
Delek Real Estate’s partners in the consortium are Ahouvi, Irish REIT Quinlan Private, and Israeli companies Electra Real Estate Ltd. (TASE:ELCRE), FIBI Holdings Ltd. (TASE: FIBI), Dorea Investment and Developments Ltd. (TASE:DORA).
Published by Globes [online], Israel business news - www.globes.co.il - on December 31, 2006
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