London-listed hotel group MWB has sold four of its Malmaison hotel projects at a big discount to pay down debt in a sale-and-leaseback deal with funds managed by Germany's Deka Immobilien and UK-based Legal and General Property (LGP). Deka and LGP paid £86.8 mln (EUR 99 mln) in cash for the assets.

The hotel properties will, on completion, be leased back to Malmaison for a total initial annual rent of £6.1 mln, reflecting a net initial yield for the transaction of about 7%.

MWB said that the investment volume reflected 'a strong outcome' for shareholders in the current market environment. However, the assets were sold at a 40% discount to the £142.4 valuation at end-December 2010. The proceeds will go to paying off Malmaison's debt, which stood at £272 mln at end-2010.

Deka acquired the Malmaison hotel at Charterhouse Square, London. Malmaison is leasing back the asset which was valued at £44.5 mln.

LGP bought the Malmaison hotels in Birmingham, Newcastle and Manchester. The hotels were valued in December respectively at £34.6 mln; £27.4 mln and £35.9 mln.