New York-based Northwood Investors and Irish partner Avestus Capital narrowly missed out last week on acquiring a loan of €60 million owed to IBRC relating to the Four Season Hotel in Prague after debt finance for hotels in central Europe remain frozen.
The loan owed by the hotel is now to be transferred into the National Asset Management Agency. Avestus originally opened the five-star hotel on the Danube in 2001. Its partner Northwood was founded in 2006 by John Z Kukral, the former chief executive of Blackstone Real Estate Advisors. It has raised $2.8 billion to invest to date.
Threshold price
Northwood and Avestus submitted a strong equity bid for the loan but the consortium was unable to secure sufficient debt finance from international banks to cross the threshold price for the loan set by advisers to the special liquidator of IBRC.
About five others bidders also failed to meet the threshold prices set by KPMG, the liquidator of IBRC. Other bids are understood to have failed to meet the threshold price because of uncertainty around bank lending for hotels in central Europe.
Other factors lowering the value of the hotel, which is trading well, include the risk of flooding from the nearby river and issues around title if the hotel were to be expanded in future.
The original investors in the hotel include former Late Late Show presenter Gay Byrne and ex-Anglo Irish Bank chairman Seán Fitzpatrick.
As credit markets recover and demand for hotel assets rise, Nama is expected to get most, if not all, of the value of the loan related to the Four Seasons in Prague back. Investors’ equity will almost certainly be wiped out.
