Firm advises on $133m hotel deal

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A firm has advised on a major hotel acquisition From Silverneedle, which operate over 50 hotels in the Asia Pacific region.

Challenger Life Company Limited received advice from Herbert Smith Freehills on the hotel acquisition and lease back arrangement.Partner Michael Back led the team advising on the transaction.

The acquisition of the prominent hotel was a complex one, with Challenger buying the partially renovated hotel and then leasing it back to its previous owner and operator, Silverneedle Hospitality Group.

“We were purchasing a property that had been significantly refurbished and there were still works being undertaken and that we were leasing it back to the vendor so it meant that both parties were wearing two different hats, vendor and lessee and purchaser and leaser,” said Back.  “We had to deal with things like who would be responsible for defects in the building works post settlement, what sort of retention amounts should be retained from the purchase price to cover any issues that arose post settlement and the other complexity is that we were leasing back the hotel to the vendor.”

Back said that the real estate market is looking strong for the remainder of 2015.

“I think generally, the real estate market is very strong.  There is no shortage of capital across all sectors: hospitality, retail, and commercial office,” he said.  “The difficulty is finding assets or product and that’s why this was an important deal for our client in that they had been able to identify this asset in a very tight market.”

Ashurst advised Silverneedle.
 
 

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