The growing debt market crisis has forced Royal Bank of Scotland (RBS) to pull the sale of a £1.1 billion package of hotel assets for the second time in two months, The Times has learnt.
The 15 hotels, including the Waldorf Hilton and Cumberland hotels in London, the Park Inn at Heathrow and 11 other Hiltons, were to have been sold to Robson Asset Management (RAM), a new investment vehicle set up by Jeremy Robson, former head of principal finance at RBS.
The postponement of the deal, due to have been completed last week, follows the collapse in June of a sale to Vector Hospitality, the real estate investment trust. Investor scepticism forced Vector to cancel a £2 billion flotation that would have funded the acquisition of 71 hotels worth £2.6 billion, including the RBS package.
The irony of the latest setback is that RBS was involved on both sides of the deal, having agreed to underwrite the estimated £900 million of debt funding sought by RAM. Difficulties in syndicating the debt and nervousness among RAM’s equity investors about property values combined to derail the deal.
One source said: “The cost of the debt on this deal went up by a significant margin due to the credit crunch. The fear is that if debt gets more expensive, there could be a hit on asset prices. All of which is creating huge nervousness among investors.”
It is understood that RAM had provisionally raised about £200 million of equity funding. Mr Robson, who quit RBS in May, was to have put some of his own money into the deal alongside a consortium including Igal Ahouvi Group, the Israeli property investor.
RAM is also thought to be front-runner in the £100 million auction of National Tyres, the car repair chain.