LONDON - Covid-19 may have upended the world, but some things remain the same. The Ritz, one of London’s best-known hotels, has been sold to an undisclosed Qatari investor for 800 million pounds, Bloomberg reported on Friday. That’s not quite what it might theoretically have fetched before the coronavirus sent global asset values tumbling, but nor does it look a knockdown price.

Frederick Barclay, the 85-year-old billionaire who bought the hotel with his twin brother in 1995 and co-owns it with his family, might not agree. In a media statement earlier this month he threatened legal action against his sibling’s family if the Ritz was sold for less than 1 billion pounds. Still, such a price always looked quite ambitious. When the asset was put on the block in January – attracting interest from Saudi investors and LVMH head Bernard Arnault – 800 million pounds was already seen as a more realistic valuation by property analysts.

It certainly looks rich enough, relatively speaking. The purchase values each of the 136 rooms at around 6 million pounds – two times higher than similar trophy hotel deals like the Maybourne hotels portfolio sale in 2015. That included the similarly high-end Claridge’s and Connaught in London but was valued at only 3 million pounds per room.

The Ritz has also been growing more slowly. Its 2018 turnover rose 2% year-on-year to 47 million pounds, according to Companies House disclosures, but the Savoy, another landmark London hotel, grew by 7% year-on-year. Since London hotel occupancy rates were last week estimated to be down as much as 76% year-on-year, Bernstein analysts said, it’s hard to see that the sellers have been hugely short-changed – especially given they bought it for only 75 million pounds 25 years ago.

As for the unnamed buyer, the fall in the value of sterling softens the sense of epic overpaying. Qataris’ penchant for buying the most valuable London real estate has long been a way to combine safe-haven asset acquisition with eye-catching purchases that lend the tiny emirate some security by projecting its name globally. The valuation specifics tend to be less important. Given that between 2016 and 2018 yields on London deals shrank from 4.5% to below 2% for the glitziest deals, that’s probably just as well.

CONTEXT NEWS

- A private Qatari investor bought the Ritz hotel in London for an undisclosed price which Bloomberg reported on March 27 to be 800 million pounds.

- The unnamed Qatari investor bought the hotel from British billionaires David and Frederick Barclay, twin brothers who bought the Ritz for 75 million pounds in 1995.

- Earlier in March, in a statement released to the media, Frederick threatened to sue if a sale of the Ritz went through for less than 1 billion pounds.

- A spokesperson for Ellerman Investments, one of the vehicles behind the assets of the Barclay family, however said “neither Sir Frederick nor Amanda Barclay have any relevant legal interest which would allow them to disrupt the sale”, the Financial Times reported on March 27.

- The Ritz closed on March 27 for the first time since it was opened by César Ritz in 1906, amid the coronavirus outbreak.

(Editing by George Hay and Oliver Taslic)

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