Grantchester Hotels

About

Conceived not only with investors in mind, but also hotel operators and brands, Grantchester Hotels was established in early 2019 for the express purpose of providing hotel leases in the 4 & 5-star markets, both in the United Kingdom and Europe.

Grantchester Hotels provides an opportunity for institutions, property companies and investment funds to capitalise upon the strength of the hotel markets based on a level of investment security offered by UK commercial property.

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Strategy

Our strategic objective is to provide institutional full repairing and insuring leases for investors, property companies and developers, whilst driving long-term shareholder returns by becoming the leading lease provider for four-star and five-star hotels in the UK and Europe, while in the process of developing a sustainable business that respects the interests of our wider stakeholders, investors, operators and hotel brands.

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Locations

UK and European gateway cities and airports.

Grantchester Hotels has signed its first lease heads of terms for hotels in Leeds and Newcastle; further projects are currently under negotiation in Manchester, Leeds, Glasgow and Cambridge.

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Leases

Grantchester Hotel leases are designed to allow investment into the upper end of the European and UK hotel markets, which traditionally has only been possible for investors prepared to accept hotel management agreements.

The ownership and lease structures have been drafted in consultation with UK property institutions and banks and are for periods up to 25 years, on a full repairing and insuring basis, with 5-year rent reviews linked to the Retail Price Index.

Rents are a product of each hotel’s pro-forma profit & loss projections; included are base and profit share rents, together with incremental provisions during the 1st five years of hotel trading.

Leases are co-terminus with the hotel operating and franchise agreements, both of which are held by the tenant.

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Non-Recourse Leases vs Hotel Management Agreements

  • Leases provide recourse to a rent guarantee account rather than a balance sheet
  • The rent guarantee account is put in place at lease commencement
  • Non-recourse leases fulfil all the obligations of a full repairing & insuring (FRI) leases
  • In the event of recession, hotel closure or pandemics, payments & profits with traditional leases and HMAs may stop immediately. However, with non-recourse leases rent will continue to be paid from the guarantee account
  • Both the hotel operator & franchise are invested into the lease, thus offering motivation for hotel performance
  • Leases can replace HMAs and FRI leases in existing hotels
  • Leases allow retention of the hotel operator and franchise
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News

The current pandemic has caused carnage in the hotel industry, with hotels closing, rent payments defaulted-on, and no visibility as to when we might start to pull out of this or how much damage may be done to the economy in the meantime. When we do emerge, there’s going to be a lot of opportunity and Grantchester Hotels has secured its first UK hotel agreement with the provision of a non-recourse lease.

In the event of recession, hotel closure or pandemics, payments & profits with traditional leases and HMAs may stop immediately. However, with our non-recourse leases rent will continue to be paid.

UK hotel full repairing and insuring (FRI) leases have dominated the mid-market and budget-brand sectors due to leases having recourse to operator balance sheets for purposes of rent guarantee. However, many institutions are now seeking to increase investment in the upper levels of the hotel market, but investment opportunities have been restricted by hotel companies’ reluctance, or refusal, to offer balance sheet recourse.

Non-recourse leases fulfil all the obligations of FRI leases and provide recourse to a rent guarantee account rather than a balance sheet. The leases can replace hotel management agreements and FRI leases in existing hotels whilst retaining both the hotel operator and franchisor.

Grantchester has secured heads of terms for its first UK transaction, which will be a 330-key hotel in a major city centre and are now working on further deals, including sale & leaseback opportunities. It’s expected this structure will be of interest not only to investors and developers but also existing owners experiencing difficulties due to the current pandemic.

Grantchester Hotels is out seeking additional funding for the purposes of expanding the business, in addition to investment/development partners for sale & leasebacks transactions.

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Partners



Contact

Address:





Tel/Fax:

Mobile:

Email:

2 Eaton Gate
Sloane Square
London
SW1W 9BJ
UK

+44 (0) 20 7788 7687

+44 (0) 7879 427709



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