Former Qatari leaders get debt relief exemptions on £ 725million in loans to luxury hotels hit by pandemic
Two of Qatarformer EU leaders pledged financial support and agreed to waivers ahead of possible breaches of commitments on more than £ 700million in loans guaranteed against a trio of the world’s most expensive hotels, Bisnow can reveal.
The Qatari owners of Claridges, The Berkeley and The Connaught in London Mayfair had to provide financial support due to the impact on the properties of the forced closures by COVID-19[female[feminine.
The accounts of the companies that own the three hotels deposited at Companies House just before Christmas show how the owners of luxury hotels with debt secured against them must negotiate agreements with lenders.
A Qatari-controlled vehicle bought Maybourne Hotel Group, which owned all three hotels, for £ 1.4 billion in 2015 after a legal battle over their ownership. The hotels were split between two of Qatar’s ruling elite in 2017.
Claridge’s, with 203 rooms, is owned by Sheikh Hamad bin Khalifa Al Thani, the former ruling Emir of Qatar and member of the ruling family.
In accounts for the year through December 2019, but which deal with the impact of COVID-19, Coroin, the vehicle that owns the hotel, said he had agreed with lender Barwa to defer interest and capital payments on a £ 376million secured loan against the hotel.
He said a debt service covenants waiver had been agreed to until the end of 2020 and if that waiver was not extended until 2021, it would violate the loan covenants. He said he expected the waiver to be extended.
Regardless, the company said it depends on Khalifa Al Thani to meet operating and capital expenses, and that it is committed to providing continued support. The loan matures in 2022.
The year 2020 affected by COVID is not covered in the financial results filed by the company, but in a note on the pandemic, it said that the performance of its hotels had been severely affected.
The company also owns the Fitting hotel in Beverly hills, which he bought for $ 415million (£ 320million) in 2019 and renamed Maybourne. This property is backed by a $ 200 million loan from JP Morgan secured against it, and the results make no mention of loan negotiations relating to that property.
Coroin said its real estate assets are valued at £ 1.1 billion. In 2019, before the coronavirus pandemic, it spent £ 69million to modernize Claridge’s, including an extension that will bring the number of rooms to 233. In that year, the hotel made an operating profit £ 3.4 million on a turnover of £ 58 million. That profit was down from £ 14million the year before as rooms were closed during the upgrade.
The 121-room Connaught and 210-room Berkeley are owned by Sheikh Hamad bin Jassim bin Jaber Al Thani, former Prime Minister of Qatar and former chief of his sovereign fund.
In April, he defied the panic that plagued the financial markets in the first months of the pandemic by refinancing the two hotels. The Connaught accounts show it is secured by a £ 155million loan with a 2.7% interest rate margin. The Berkeley’s accounts show he has a loan of £ 183million guaranteed at the same margin. Both loans mature in 2030 and were granted by a consortium led by German real estate lender Deutsche Pfandbriefbank. The business value of the two hotels is £ 459million.
The vehicles owning these hotels have already had to negotiate waivers of commitments with new lenders, according to accounts filed in December. Exemptions have been guaranteed on the debt-to-earnings ratio before interest, taxes, depreciation and amortization clauses until August 2021, according to hotel accounts. Again, the owner has said he will step in and support operations and debt payments if necessary.
Accounts show The Connaught achieved operating profit of £ 8.5million in 2019, a profit margin of 15%; and that The Berkeley made an operating profit of £ 6million, a profit margin of 11%.