Airport hotel group buys BAA property
[24th March 2008]
Airport hotel group Arora is buying a portfolio of commercial properties from airport operator BAA for £265 million.
Arora was started by hotel magnate Surinder Arora, who after arriving in the UK at the age of 13 began his working life as a customer services agent for airline British Airways.
In 2006 Arora bought nine airport hotels from BAA in a deal worth around £300 million. Arora Holdings is believed to be the largest family owned hotel group in the UK. The group is now building an airport hotel at Heathrow Terminal 5.
BAA’s property portfolio, which includes airport offices and warehouses used to store airport cargo, was valued at around £1.1 billion last year. But the downturn in the financial markets, which has hit commercial property values as well as house prices, has made it difficult for the company to find a buyer.
Arora is buying 33 of the 58 airport property sites owned by Airport Property Partnership (APP), which is a joint venture between BAA and Morley Fund Management. The 33 properties are mainly at Heathrow airport.
After paying off some of APP’s debts plus brokers fees, the rest of the £265 million will be split between BAA and Morley Fund Management. This will only make a small dent in the £10 billion debt incurred by Spanish group Ferrovial when it bought BAA, making it more likely BAA will have to sell off other assets. There are rumours that BAA may even have to sell Gatwick airport.
BAA is continuing to try to find buyers for the rest of its airport property portfolio, which consists mainly of industrial buildings such as warehouses and development land.
Earlier this month cash strapped BAA sold its World Duty Free shops to Italian group Autogrill for £546 million.
Written by: Nick Purdom
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