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Delek Buys 47 Hotels From Bank

TEL AVIV-A unit of locally headquartered Delek Real Estate and partners agree to acquire a Marriott hotel portfolio in Britain from the Royal Bank of Scotland for $1.69 billion.

By Brian K. Miller | Updated on January 02, 2007

TEL AVIV-A unit of Delek Real Estate said Sunday it and partners have agreed to acquire 47 Marriott-managed hotels in Britain for $1.69 billion (pounds 856.1 million). The 8,456-room portfolio is expected to produce an average annual net income of $153.9 million (pounds 78 million) over the next 10 years. The transaction is scheduled to close in early March.

The acquirers will have to provide $398.56 million (pounds 202.7 million) in shareholders’ capital for the purchase, according to a Delek statement filed with the Tel Aviv Stock Exchange. The seller, Royal Bank of Scotland, is also financing the deal. The financing entitles the bank to 20% of the profits from the sale of the hotels in the future, according to the filing.

Marriott has agreed to continue managing the hotels for 30 years and may extend the deal by 10 years. Delek Belron International’s stake in the portfolio will be 17%. It did not name its partners, but published reports have mentioned Electra Real Estate and businessman Egal Ahouvi.

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