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Shiva Hotels secures £230 million financing with Cale Street and Crosstree for Marylebone Lane Hotel development

By Richard Gotla, Senior Director at FTI Consulting Strategic Communications for Shiva Hotels
29 June 2020
4 min read
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-Refinancing agreed during COVID-19 pandemic is strong vote of confidence in the project-

Shiva Hotels Group (“Shiva Hotels” or the “Group”), the UK-focused hotel owner and manager, has secured a £230 million development financing package from Cale Street Investments (“Cale Street”), the real estate investment and finance firm and Crosstree Real Estate Partners (“Crosstree”), the UK-focused real estate investment firm, to fund the construction, through to completion, of its 199-key luxury lifestyle hotel in Marylebone, London. Agreed during the COVID-19 pandemic, the transaction represents one of the largest recent development facilities for a Central London hotel.

Cale Street is providing £160 million and Crosstree £70 million of the initial four-year facility, which has an option to extend and refinances an £80 million loan that was in place with ICG Longbow. It represents the Group’s first transaction with Cale Street and Crosstree, both of which have extensive experience financing complex hotel projects of this type.

A key driver in the strategic acquisition of this site, previously an NCP operated car park, was both its adjacency to the new Bond Street Crossrail station, as well as the extensive frontage to both Welbeck Street and Marylebone Lane, which creates a high profile, iconic corner. Since acquiring the site, Shiva Hotels has worked closely with Westminster City Council and local interested parties to secure a planning consent for an exceptional building, featuring multiple destination restaurants, a roof top swimming pool and a subterranean event space.

John F Hunt, the construction specialist, has been appointed to undertake demolition site ground works as well as the initial substructure and frame construction works, with the main contractor to be appointed early next year. The first guests are due to be welcomed in early 2023.

The Marylebone Lane Hotel is one of the new collection of luxury lifestyle hotels being pioneered by Shiva Hotels, which includes two further development sites, Morley House on Holborn Viaduct and the former Soho Works site on Great Marlborough Street and Poland Street. In addition, The Guardsman, off Buckingham Gate, and Middle Eight, in Covent Garden (formerly known as the Kingsway Hall Hotel and which has had a £50 million refurbishment and repositioning), are scheduled to open to guests this Autumn. The new experiential luxury concept leverages the Group’s extensive track record of investing in, developing and managing hotels across the UK since 2001, with a heavy F&B emphasis and focus on curated design.

Rishi Sachdev, Managing Director of Shiva Hotels, commented: “This is a major milestone for our Marylebone Lane development, and brings the delivery of what we believe will be one of London’s most iconic hotels one step closer. Cale Street and Crosstree are both hugely experienced and highly selective real estate financiers and bring a deep understanding of the UK hospitality sector. Securing this package, particularly in the current economic climate, is a further endorsement of our vision to create an unrivalled luxury lifestyle hotel brand and we are extremely excited to be partnering with both parties.

“This is a challenging time for everyone involved in the hospitality sector and our near-term focus continues to be on working closely with all our stakeholders to navigate through this period of uncertainty. Longer-term however, we are steadfast in our conviction that the global appeal of London will continue and that this will translate into strong demand for our carefully curated hotels in highly desirable locations.”

Peter Robinson, a Partner at Crosstree, said: “Given the current dislocation in real estate financing markets for projects of this type, Crosstree together with Cale Street are pleased to be working with Shiva in taking forward this prime hotel development. While no doubt we are currently in a challenging period for the hospitality industry, we share a longer term vision of the resilience of London and high quality real estate and locations such as this.”

BBS Capital acted as debt advisor for Shiva Hotels.

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