Luxury London hotel for sale as £275 million refinancing stalls

Jones Lang LaSalle Inc. has been appointed to market the five-star BoTree hotel on Marylebone Lane, people with knowledge of the plan said. The 199-room property, built on the site of a former car park, was developed by Shiva Hotels Group and cost £375 million ($487 million) to build, the people said, asking not to be identified as the process is private. Shiva has since re-branded to Place III Hotels. 

Place III has been attempting to refinance the hotel since it opened in September 2023. It has about £275 million of debt secured against it, with a senior loan from Cale Street Partners and a junior facility from Crosstree Real Estate Partners, the people added. There is no formal guide price for the sale, but those involved in the consensual process are targeting a price above the outstanding value of the debt. 

A representative for JLL confirmed the broker’s appointment to sell the property but declined to comment further. A spokesperson for Place III said refinancing efforts were continuing concurrently with the sales process; a spokesperson for Crosstree declined to comment; a representative for Cale Street did not respond to calls and emails seeking comment.

Shiva originally bought the site for about £100 million in 2016. The business, founded by former Lehman Brothers derivatives trader Rishi Sachdev, was affected by the Covid-19 pandemic and then hit hard by rising interest rates, which affected its interest coverage ratios. 

Still, luxury hotels have been one the best performing parts of the beleaguered commercial real estate market in recent years. The possible sale of the BoTree represents a rare opportunity for the world’s largest hotel brands to buy a completed high-end central London property without an operator already in place.

JLL was instructed late last year to refinance both the BoTree and Shiva’s Soho project at Brickmakers Yard. Under the proposed terms, it sought £316.5 million to repay the £275 million of outstanding debt on the BoTree, while £12 million would be used to complete the fit-out of the eighth and ninth floors, according to a prospectus seen by Bloomberg News. 

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Shiva anticipated the hotel would generate almost £100 million in revenue and over £28 million in earnings by its third year of operation, the prospectus shows. It also sought more than £170 million of debt to finance the construction of the Soho project. 

A nearby hotel, the Six Senses in Bayswater, sold earlier this year at a price reflecting almost £1.7 million a key. Were the BoTree to change hands at a similar level, that would comfortably cover the outstanding debt and allow Shiva to recoup part of its £100 million investment in the project. 

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There is the potential to extend the number of rooms at the BoTree to 219 once the upper floors of the building have been completed. The hotel also boasts two restaurants, three bars, a VIP late night private hire party venue and a terrace with infinity pool. 

H.I.G. Capital, which financed two other Shiva London properties, has taken equity stakes in those properties as part of a refinancing deal, Bloomberg News reported in February. 

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