Brookfield has put holiday resort firm Center Parcs up for sale in a deal that will test investors’ willingness to bet on an economy hit by high inflation and rising interest rates.
The Canadian private equity group is seeking between £4 billion (€4.6bn) and £5 billion for Center Parcs, according to people familiar with the matter, after examining an exit from the investment in recent months.
The decision to go ahead with the sale marks a bold move for Brookfield as the UK faces falling property values and higher interest rates. But a sale could potentially net a windfall for Brookfield, which acquired the resort group from Blackstone for about £2.4 billion in 2015.
Brookfield has appointed investment bankers who have been sounding out potential buyers in the past week, the people said.
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Brookfield and Center Parcs declined to comment.
Center Parcs operates six holiday villages in the UK and Ireland, offering attractions such as water parks and forest playgrounds. Center Parcs’ five UK sites were independently valued at £4.1 billion in April based on the value of the real estate alone.
Accounts for Center Parcs Ireland Ltd, which operates a holiday village in Co Longford, show that it returned to the black in the year to the end of April 2022. It made an after-tax profit of €7.4 million during the period, as opposed to a loss of €16 million in the previous 12 months, which was heavily impacted by Covid-19 lockdown restrictions.
The accounts also show a net book value of €200.6 million on the land and buildings there, and borrowings of €165.3 million, which is due to be repaid on December 1st, 2023.
The business is considered relatively resilient to the UK economic downturn as more travellers choose domestic destinations instead of overseas holidays in leaner times. The prospective sale also underscores the resilience of tourism and hotel businesses, which have been favoured by investors in recent months following a robust recovery from the Covid-19 pandemic.
The volumes of hotel deals struck in Europe increased to €4.3 billion in the first quarter, according to real estate advisers Cushman & Wakefield. It was one of the only property sectors to see more deal volume than in the same months for 2022, as deal-making across the real estate sector slumped.
Brookfield has invested in Center Parcs since the acquisition, spending £100 million on tech upgrades alone. The company hosts more than 2 million guests a year with 98 per cent occupancy, according to Brookfield. – Copyright The Financial Times Limited 2023
