UK: OakNorth Bank has provided a bespoke debt finance facility to Bain Capital Credit and Orka for the purchase and refurbishment of properties in central London.
The properties to be purchased with this aid are the Park Lane Mews Hotel, a 72-room four-star hotel, and three residential buildings, which include 17 units total, in Mayfair.
The funding will allow the recipients to renovate both buildings including guestrooms, lobbies, bars, and other communal areas.
These new investments come at a time of rebuilding for the UK hospitality industry. The effects of the pandemic are still lasting and will continue to impact the pace of the industry’s recovery. Current forecasts show that the UK hotel industry revenue is going to grow, from the current level of £8 billion, at a compound annual rate of 19.8% by 2025-26 to just under £19.8 billion.
Senior director of debt finance at OakNorth Bank, Deepesh Thakrar, said: “Due to our expertise across both property development and SME trading deals, we were able to create a bespoke facility that will enable Bain Capital Credit and Orka to acquire and refurbish both the hotel and the residential units, all under one facility. While it is difficult to forecast the near-term fortunes of the UK hotel market, domestic leisure demand is expected to lead the recovery in the sector, with markets that traditionally receive a greater share of domestic tourism, seeing occupancy recover first.”
Throughout the transaction, OakNorth Bank was advised by Allen & Overy.
The hotel, which is in close proximity to Hyde Park, is predicted to draw demand from tourists, while the residential units are expected to draw demand from a wide variety of people, notably high net worth individuals.
Bain Capital Credit is a global company with over $43.7 billion in assets that uses a variety of credit strategies.
Fabio Longo, managing director at Bain Capital Credit, said: “We are delighted to have acquired this fantastic hotel in such a prime location in partnership with Orka. This further enhances the substantial real estate portfolio we have built throughout Europe, which we are actively growing through attractive investment opportunities. The team at OakNorth Bank were able to put together a single facility that captures both the acquisition and refurbishment of the hotel, allowing us to focus on the repositioning of the assets, and move quickly without interruption.”
Orka is a pan-European alternative investment and advisory firm that manages real estate investments and asset back businesses.
Oskar Sköldberg, co-founding partner at Orka, said: “We are thrilled to have closed our second transaction together with OakNorth this year and are excited to progress with the business plan together with Bain Capital Credit. The transaction underpins our strategy to acquire fundamentally good assets in good locations with strong down-side protection and outperformance potential.”