The company that introduced the concept of buy-to-let hotel rooms, boasting that investors could "earn money while others sleep", fell into administration yesterday.
GuestInvest owned Blakes Hotel in London's Mayfair and was developing a string of other hotels, including one on the site of the former Whitbread Brewery in the City of London. HBOS owned 19.9% of the company.
Hundreds of investors paid upwards of £250,000 for a GuestInvest hotel room where they earned 50% of the room rate plus the right to stay for 52 nights a year. The rooms at Blakes were on sale for £1m each but were rumoured to have found few buyers.
Its advertisements were plastered across London's transport network and initially, while hotel occupancy rates were buzzing and finance was cheap, investors earned returns of about 10% a year.
In 2006, founder Johnny Sandelson entered into a £140m joint venture with HBOS to finance new acquisitions, and brought in financier Sir Mark Weinberg as a non-executive director. Amid poor sales and slowing hotel occupancy rates in London it appointed Deloitte as administrators yesterday. Joint administrator Nick Edwards said he had immediately secured the future of Blakes but is assessing the future of the group's other assets and the position of investors.
"The Blakes Hotel is unaffected by the insolvency of the GuestInvest Group. It is a very prestigious trading asset and is not subject to any form of insolvency proceeding. Blakes continues to trade as usual."
Firms which acted for buy-to-let investors pointed the finger of blame at HBOS.
Stuart Law, chief executive of property investment firm Assetz ,said: "It is very sad to hear the news that GuestInvest has gone into administration following an HBOS reduction in lending facility and we hope that a new owner comes forwards shortly."
Others blamed GuestInvest for overspending on acquisitions and development projects.
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Saturday, 4 October 2008
Posted by Debtsgone LTD at Saturday, October 04, 2008
Labels: Buy-to-let hotel rooms group GuestInvest in administration
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