The Irish owners of the London hotel chain, the Savoy Group, are likely to sell its flagship property for a reported €300 million (£200 million), just five months after buying the business.
Quinlan Private, the company run by Mr Derek Quinlan, announced yesterday that it was negotiating the sale of the Savoy Hotel to a company controlled by Saudi Arabian billionaire, Prince Alwaleed Bin Talal and Bank of Scotland.
Quinlan Private and a consortium of Irish investors bought the 115-year-old hotel group last April for €1.1 billion. The chain is made up of four hotels - the Savoy, Claridges, the Berkeley, the Connaught - and the Savoy Theatre.
If the deal with Prince Alwaleed and Bank of Scotland goes through, they will own the Savoy Hotel and its restaurant, Simpsons in the Strand, while the other three properties and the theatre will remain with the Irish consortium.
Quinlan Private did not reveal the likely sale price. However, reports yesterday pitched it around €300 million, close to one-third of the original investment. Mr Quinlan indicated that the deal would be profitable and it looked set to yield a quick return to the consortium.
"The potential to sell the Savoy itself presents a logical opportunity to make an immediate return on our initial investment and allow us to focus on the development of the other hotels in the group," he said.
Mr Quinlan is one of the investors in the Savoy through his Quinlan Private vehicle. The investors are estimated to have put up around 15 per cent, or over €150 million, of the purchase price and borrowed the balance to fund the deal.
A profitable sale of the Savoy would represent an exceptionally fast return for the investors. Commercial property purchases on the scale of the original investment are normally geared at the long term.
Also, Quinlan Private's usual approach is to buy and hold.
Mr Quinlan is a former Revenue inspector turned tax adviser. He set up Quinlan Private in the late-1980s. He built his reputation by devising schemes for high-net-worth individuals to invest in property developments that benefited from tax incentives. His firm now has a portfolio of 140 investment properties.
Prince Alwaleed and Bank of Scotland have told Quinlan Private that if they buy the hotel and restaurant, they will appoint Canadian Group, Fairmont Hotels and Resorts, to manage the businesses. The prince has a stake in Fairmont, which is a leading luxury hotel operator.
He also has a stake in Citigroup, Canary Wharf and a 23 per cent holding in Four Seasons Hotels, which owns the hotel group of the same name. Prince Alwaleed is a member of the Al Saud family, which rules Saudi Arabia. He is reckoned to be one of its richest members.
Mr Quinlan was also the lead investor behind the only Irish Four Seasons Hotel in Ballsbridge in Dublin. His firm has a number of other properties in Europe that are managed under the Four Seasons flag.
