A few years ago, developer Paddy McKillen owned a stake which was over thirty per in a trio of prestigious London hotels, including the Connought, Berkeley and Claridges. High levels of interest from the Barclay brothers to purchase the hotels led to four years of rivalry between the property owners, and over £30 million of legal fees, where the brothers wrongly assumed McKillen would give up his stake in the properties due to pressure on other parts of his business.
However, the competition between McKillen and the Barclays did not stop the brothers from completing two quick deals for the same properties in 2011, which effectively secured them control of the three hotels with a majority share. Yet, they remained unable to remove Paddy McKillen due to support from the Qataris.
In 2012 the Barclay brothers used their position within the takeover vehicle Coroin Ltd (now renamed the Maybourne Hotel Group, owning and managing the trio of hotels) to force all shareholders to inject capital into the business through a rights issue; the hope was that Paddy McKillen would not be able to produce the £50 million required. Once again, the Qatari’s provided the capital for McKillen, and so he stayed on.
Today, Paddy McKillen remains a 36% shareholder in the Maybourne Hotel Group, where the Barclay Brothers have since sold out to Qatari investment vehicle, Constellation Hotels, who bought a 64% stake in the Maybourne Group in April 2015.
The new Qatari owners are now considering the sale of the Berkeley Hotel in Knightsbridge for £750 million, and the hotel is being offered off market to a select few parties. If a deal were to take place, there are three development options available. The first is the demolition of the 214-bedroom hotel and rebuild over the course of 6 years, doubling the building in size with half the 600,000 sq. ft., where the property would become 70 luxury flats, in addition to a hotel with 131 bedrooms. The other option is to make more minor amendments such as adding around 27 hotel rooms, additional square footage for residential, retail and leisure purposes. The third option would be to make smaller refurbishing of the existing hotel.
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.
