Barclay brothers in talks to sell Ritz hotel to Saudi investors

Jeddah-based group representing wealthy families shows interest in London institution

The billionaire Barclay brothers are in talks to sell the Ritz Hotel in London to a private investment group that represents wealthy Saudi Arabian families, people close to the discussions said.

David and Frederick Barclay are reviewing interest from Jeddah-based Sidra Capital which may lead to one of London’s most coveted properties changing hands for the first time in 25 years.

The process to sell the hotel has been under way for several weeks and a handful of parties have expressed interest. But some of these potential offers have fallen short of the price that the brothers hope to fetch in a sale of the hotel, one person added.
The Barclay brothers and Sidra declined to comment.

One person working with another potential bidder said that the brothers wanted offers for The Ritz to surpass £750m, if not more. This person added that it was unclear from the outside whether Sir David and Sir Frederick were aligned over the disposal.

The people following the discussions with Sidra Capital did not disclose which Saudi family was funding the potential bid or the exact amount that they were in talks to offer. These people also cautioned there was no certainty that the talks would lead to a deal. They warned that other potential bidders have been following the process.

The hotel in Piccadilly, built by César Ritz in 1906, has been popular with stars from the actor Charlie Chaplin to the ballerina Anna Pavlova and was the scene of meetings between Winston Churchill, Dwight Eisenhower and Charles de Gaulle during the second world war. A champagne afternoon tea for two people retails for £170, according to the hotel’s website.

The Barclay brothers acquired the luxury hotel, on the edge of the St James and Mayfair districts of London, for about £75m in 1995. They proceeded to invest tens of millions of pounds to restore it to its former opulence.

A sale of The Ritz has been mooted since Sir David and Sir Frederick authorised a review last year of their business interests, which also include the parent company of The Daily Telegraph newspaper.

The hotel made a pre-tax profit of £7m on turnover of £47m in 2018, the most recent year for which figures are available — down from a £12.8m profit a year earlier. But the Ritz casino made an £8.9m loss during the year on £17.6m of turnover. The business, including the casino lease, is valued at more than £800m, according to the hotel’s latest accounts.

If a deal were agreed, the Ritz would become the latest trophy asset in the London hotel market to change hands, after the Grosvenor House hotel in Park Lane was acquired by the Qatar Investment Authority in 2018 and the Barclay brothers acquired the Beaumont hotel in Mayfair that same year.

In 2015, the brothers disposed of their controlling stake in the group that owned the Berkeley, Claridge’s and Connaught hotels.

Sidra Capital earlier lost out in bidding for Grosvenor House. It has previously bought a series of UK property assets including Kinnaird House, an office building in Pall Mall, near Trafalgar Square.

The property brokers JLL and Spartan Advisors, a company founded by Frederick Barclay’s former son-in-law Richard Faber, have both been working on the sale, but the brothers have also received some offers directly, said people familiar with the talks.

Source: Financial Times

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