Marathon Asset Management's 180 million pounds sterling ($255 million) acquisition of 17 hotels in the United Kingdom marks a return to investing in the U.K. for the New York-based firm. It's also the first major hotel portfolio deal in the country in months.

CoStar News reported the deal between MCAP Global Finance, the London-based affiliate of Marathon, and New York-based Cerberus Capital Management for the 2,374-room portfolio early Wednesday.

Marathon had previously exited its investments in U.K. hotels in December 2019 with the sale of 17 IHG Hotels & Resorts and Hilton properties comprising 3,383 rooms for 460 million pounds sterling to Thai owner DTGO Corporation.

That deal consisted of properties under DoubleTree by Hilton, Hilton Garden Inn, AC Hotel by Marriott brand, Hotel Indigo, Holiday Inn and Crowne Plaza brands managed by Valor Hospitality and in regional U.K. markets such as Birmingham, Glasgow, Liverpool and Manchester.

The latest portfolio deal also includes full-service properties across regional U.K., but in this case mostly are branded under IHG. Fifteen are Holiday Inns, and two are Crowne Plazas. They are located in markets such as Leeds, Leicester, Reading and Southampton.

Cerberus bought the portfolio, which at the time held 18 Holiday Inn hotels and 2,443 rooms, in 2015 from Singapore sovereign wealth fund GIC Real Estate, Lehman Brothers Real Estate and Realstar for approximately 225 million pounds sterling.

Neither Marathon nor Cerberus responded to requests for comment on this story.

Marc Finney, head of hotels and resorts at business advisory Colliers, said Cerberus had been marketing its portfolio for most of the year and he's glad to see Marathon back in the U.K.

A tough calculation says the deal is for about 75,000 pounds sterling a key, he said, adding it's "probably not much away from half of the replacement cost, so theoretically you’d have to say Marathon got a good buy."

He did say some work will have to be done to maximize the value of the company's latest buy.

“Maybe there is some additional defensive CapEx, and of course the risk of getting back into the market. There are no risk-free buys right now, and perhaps Cerberus would have taken most of the low-hanging fruit,” he added.

James Darbishire, director at business consultancy JD Partners, said Cerberus purchased the portfolio in 2015 for more than it has just sold it for. In 2015, the portfolio consisted of one more hotel and 69 more rooms.

"It appears it took a slight haircut on the deal," he said.

Liz Hall, owner of Liz Hall Hotel & Travel Consulting and former head of hospitality and leisure research at consultancy PwC, said there has been some transactions activity in the U.K. and Europe, but mostly at low prices.

“Sales depend logically on the price. There is a lot of product that seemed like it had good prospects before [COVID-19] happened, but the [U.K.] provinces are doing well, even in cities there if they are near to a leisure destination.

“And even British business travel, there’s a little bit of it around, and if you add that to the pent-up demand, some resorts and markets are likely to have a good year."

The long-term prospects for Marathon's new hotel portfolio are still uncertain, Hall said.

“I am sure there is not a prize for saying that, but how about next year? If [domestic] guests paid through the nose for a U.K. holiday this year, and it rains for half of it, well, next year they’ll probably start looking again internationally,” she said.

While Marathon is the first group to make a significant investment in U.K. hotels over a matter of months, there are signs it won't be the last.

Darbishire said he has seen pricing be fairly robust, but added there is much more capital waiting to be placed.

"There was a lot of capital raised in the belief that there would be a firesale, but that has not materialized," he said.

“Hedge funds have money,” Hall said, while Finney added there is “huge money out there.”

Finney said hotel sales in the U.K. are generally 10% below the values seen before COVID 10 but aren't hitting the 20% or 30% discounts asked for during the pandemic.

“For good quality assets, well placed and with a plan and established management in place, the price is nearer to 10%, and everything that comes gets a lot of interest, which obviously helps drives prices,” he said.

The thinking is that London will eventually come back, too.

“We’d agree with that, but clearly in a market where 60% of demand is international, and who cannot get to London at the moment, there will be a lag, and the same is probably true of Edinburgh and to a lesser extent, Manchester. Airport hotels, too, will see some struggles,” Finney said.

Finney added that a “we’re in it for the long term” mentality still exists among most owners.

“There might be some pressure from investors, lenders, to cut and run, but this pressure is not manifesting itself hugely now, although there might be some early signs,” he said.

With government aid likely will to end soon, banks might grow skittish if performance of assets doesn't rebound quickly, Finney said.

“Patience could wear thin,” he said.

He added hotels have sold during the pandemic, with Colliers having sold 48 hotels, almost one a week, in the U.K. in 2020.

“Yes, that is across a broad range, but there is certainly good demand in coast and country hotspots, which have done well amid difficult trading conditions, and trade should be heavily up this year,” he said.

Even though domestic guests staying within the U.K. spent only 40% of what they would spend if traveling international, that spend still equated to 22 billion pounds sterling, he said. That has been an additional 140 billion pounds sterling deposited in domestic banks during the pandemic.