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Mon 26 Sep 2016 01:51 PM

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Qatar's SWF abandons bid for luxury London, New York hotels

Debt attached to portfolio is reportedly a factor in Qatar Investment Authority’s withdrawal

Qatar's SWF abandons bid for luxury London, New York hotels
Grosvenor House London.

The Qatar Investment Authority (QIA) has reportedly abandoned talks to buy London’s Grosvenor House Hotel and two hotels in New York in a prospective deal estimated at one point to be worth $337 million.

In July, QIA was said to be in discussions for the portfolio of hotels owned by jailed Indian businessman Subrata Roy’s Sahara Group, which owns the Grosvenor House and majority stakes in New York’s Plaza and Dream Downtown hotels.

QIA’s withdrawal, reported in the UK’s Financial Times this week, would come as a blow to Sahara, which has been seeking to sell the properties to release its founder from jail. Roy was imprisoned in 2014 on contempt of court charges relating to a convertible bond issue.

The withdrawal also increases the likelihood that the properties will be acquired by a consortium comprising a Saudi family that runs a private wealth fund in Dubai and UK family office 3 Associates, which lodged a $1.3 billion rival offer for the portfolio in July, it was reported.

However, British billionaire brothers David and Simon Reuben own around $750m of debt cross-collateralised against the three properties, and, while they have yet to put in a formal bid, are thought to be interested.

According to the FT, the debt on which a Sahara group company has been in default since 2015 is eroding the assets’ equity value. This is understood to be one reason for QIA’s withdrawal. The Qatari fund had reportedly been eyeing Park Lane landmark the Grosvenor House for at least five years.

Deloitte, which are administrators to the Grosvenor House owner, are expected to open a formal auction process later this year in which the Reubens are likely to bid.

The FT said QIA, Deloitte, 3 Associates and the Reubens declined to comment. Arabian Business has contacted representatives for QIA.

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