RBS seizes Delek Real Estate properties in Britain

Bank failed to secure a debt-for-equity restructuring deal for the properties, 'The Financial' Times reported.

By YAEL GRUNTMAN/GLOBES
Money 311 (photo credit: Bloomberg)
Money 311
(photo credit: Bloomberg)
The Royal Bank of Scotland plc has seized the £1 billion portfolio of 42 Marriott hotels across the UK from Yitzhak Tshuva-controlled Delek Real Estate Ltd., Igal Ahouvi’s Blenheim Property Group Ltd. and Irish REIT Quinlan Private, after the bank failed to secure a debt-for-equity restructuring deal for the properties, The Financial Times reported.
The Royal Bank of Scotland appointed Ernst & Young as receivers for the hotels. The three companies bought 47 Marriott hotels from the bank in 2007 for £1.1b. and subsequently sold five hotels for £50 million, which was used to pare down the debt. The bank will try to sell the hotels to recover as much of the £900m. of debt owed by the companies.
The Royal Bank of Scotland had been in talks since 2008 to restructure the debt, under which the bank would have swapped some of the debt for an equity stake.
The portfolio comprises of 42 four- and five-star Marriott hotels, with about 8,000 rooms altogether. Marriott International Inc.
manages the hotels under a 30-year agreement.
Delek Real Estate subsidiary Delek Global Real Estate Ltd. owns 17 percent of the Marriott portfolio.
In a statement to the Tel Aviv Stock Exchange, Delek Real Estate said it has been writing down the investment in the portfolio since the third quarter of 2009 and that the foreclosure would therefore have no effect on the company’s financial reports.
Quilan Private owns 44% of the Marriott portfolio, Blenheim owns 13%, Electra Real Estate Ltd. owns 10%, Zadik Bino owns 5% through FIBI Holdings Ltd., Dorea Investment and Developments Ltd. owns 3% and UK investors own 8%.
In a notice to the TASE, Electra Real Estate said the fair value of the balance of its investment in the Marriott portfolio was currently £6.3m. Following the appointment of a receiver, it was examining the value of the investment, it said, adding that if it makes any change in the value, it would be stated directly in shareholders’ equity as part of other overall profit.