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Rbs Takes Control Of 42 Uk Marriott Hotels


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HOLA441

http://www.bloomberg.com/news/2011-06-14/rbs-takes-control-of-42-marriott-hotels-in-britain-ft-reports.html

RBS Takes Control of 42 Marriott-Branded Hotels Throughout United Kingdom

Royal Bank of Scotland Group Plc (RBS), Britain’s biggest government-owned bank, has taken control of 42 Marriott-branded hotels across the U.K and appointed Ernst & Young as receivers for the owner of the hotels.

The Edinburgh-based bank named Ernst & Young as receivers for Professional Ventures Corporation, the owner of the portfolio of hotels, David Gaffney, a spokesman for the bank, said by telephone yesterday.

RBS has assumed control of the 1 billion-pound ($1.64 billion) property portfolio after failing to obtain a debt-for- equity restructuring of one of its largest real estate loans completed in the property boom, the Financial Times reported, without saying where it got the information.

The properties were acquired from the bank for about 1.1 billion pounds in 2007, and RBS owns about 700 million pounds of the debt that was used to finance the acquisition in a syndicated loan structure, the FT said. Ernst & Young will appoint a board of directors to run the properties and prepare a sale, the newspaper said.

Marriott International Inc. will continue to operate the hotels, and RBS’s decision will not affect customers, suppliers or staff at the hotels, Ernst & Young said in an e-mailed statement last night.

A message left at the Marriott news center number in the U.S. outside of office hours last night was not immediately returned.

Yet more debt "owned" by RBS, meaning I guess, yet more debt passed on to the tax payer.

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HOLA447

Anyone really surprised this chain has resorted to this? I remember being put up in a Marriott room by my employer 10 years ago, About 3 times the cost of a decent B&B, and the food was absolute garbage - no doubt made cheaply in a factory somewhere, and warmed up in a microwave. Decent sports facilities - for a price! Total rip-off - but to be fair, several other chains were at least as bad.

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RBS has assumed control of the 1 billion-pound ($1.64 billion) property portfolio after failing to obtain a debt-for- equity restructuring of one of its largest real estate loans completed in the property boom, the Financial Times reported, without saying where it got the information.

The properties were acquired from the bank for about 1.1 billion pounds in 2007, and RBS owns about 700 million pounds of the debt that was used to finance the acquisition in a syndicated loan structure

SO RBS leant the company the money to buy the properties FROM RBS, and now think that commercial property has only dropped 9% since 2007. Or at least that's what they've put on there books. If it turned out the hotels sell for £500m RBS is in for a big hit, betweek 200 and 600 million depending on the exact structure of the rest of the loan.

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SO RBS leant the company the money to buy the properties FROM RBS, and now think that commercial property has only dropped 9% since 2007. Or at least that's what they've put on there books. If it turned out the hotels sell for £500m RBS is in for a big hit, betweek 200 and 600 million depending on the exact structure of the rest of the loan.

Surely you mean the taxpayer is in for a big hit?

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This is a good example of why RBS should have been let go, let the depositors and bondholders take the hit, not the taxpayer.

Sounds like the lending going on was incredibly risky, I guess RBS are going to be taking a bath over this. They dont seem to have ensured that the borrower put enough equity into the deal, which is why Marriott seem to be swanning on without a care.

Where are the prosecutions for Balance Sheet Fraud?

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Expect Travel Lodge or Premier Inn will buy them up if they can raise the finance from emm...... RBS.

On a more serious note all these hotel chains including the ones named above were built on debt on the back of expectations of rising property values. I suspect Marriott are not the only one in trouble. I have a both a travel lodge and a Premier Inn near me and the car parks are mainly empty except for the weekends. (I am near the seaside).

One of the above not sure which, has owners with a majority stake resident in Dubai!!!!!!! :(

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Expect Travel Lodge or Premier Inn will buy them up if they can raise the finance from emm...... RBS.

On a more serious note all these hotel chains including the ones named above were built on debt on the back of expectations of rising property values. I suspect Marriott are not the only one in trouble. I have a both a travel lodge and a Premier Inn near me and the car parks are mainly empty except for the weekends. (I am near the seaside).

One of the above not sure which, has owners with a majority stake resident in Dubai!!!!!!! :(

These aren't marriott hotels, they are Marriott branded; probably some franchise type deal.....

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The Edinburgh-based bank named Ernst & Young as receivers for Professional Ventures Corporation, the owner of the portfolio of hotels,

E & Y are getting used to running hotel groups!

Management of Von Essen Hotels were taken by surprise by the company's banks putting the business into administration.

Lloyds Banking Group and Barclays called in administrators Ernst & Young on Wednesday evening after the hotel group failed to make interest payments on its £250m debt pile.

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/leisure/8467241/Von-Essen-in-administration-after-defaulting-on-interest.html

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Expect Travel Lodge or Premier Inn will buy them up if they can raise the finance from emm...... RBS.

On a more serious note all these hotel chains including the ones named above were built on debt on the back of expectations of rising property values. I suspect Marriott are not the only one in trouble. I have a both a travel lodge and a Premier Inn near me and the car parks are mainly empty except for the weekends. (I am near the seaside).

One of the above not sure which, has owners with a majority stake resident in Dubai!!!!!!! :(

Marriott doesn't own any hotels, and is still trading. Like most hotel groups, they are a franchise operation. They do the advertising, run the website and sales phone line, set the standards that the franchise owners have to keep to, employ managers at each hotel and do staff training. The franchise operation own or rent the hotel buildings, employ all the staff and so on. It is one of the franchise companies that has gone bust, or rather the parent company of a group of 42 franchise companies. It is possible that who ever buys the franchise might decide to switch the contract to a budget brand if they think they can make more money that way, but that would be a separate decision.

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Marriott doesn't own any hotels, and is still trading. Like most hotel groups, they are a franchise operation. They do the advertising, run the website and sales phone line, set the standards that the franchise owners have to keep to, employ managers at each hotel and do staff training. The franchise operation own or rent the hotel buildings, employ all the staff and so on. It is one of the franchise companies that has gone bust, or rather the parent company of a group of 42 franchise companies. It is possible that who ever buys the franchise might decide to switch the contract to a budget brand if they think they can make more money that way, but that would be a separate decision.

...whatever ...sounds like a dodgy lending proposition ....needs a thoughtful business plan to meet the challenges of austerity... :rolleyes:

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If this is a holding company it's just effectively a case of over-leveraged landlord gone bust tenants unaffected.

Obviously, if Mariotts are the only tenants then it's likely there are weak or non-existent rental flows from the tenants which is now RBS's problem.

If any tenants end up with RBS as a landlord they could play hardball and withold rent. RBS would have do decide whether to re-enter and end the lease. Problem for them is if they had to try and sell any reasonable number of these commercial properties the market values they'd achieve would promptly cause the banking sector to fall over again.

Extend those zombie loans and pretend there's a cat in hells chance they'll ever be repaid.

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