Arora Group is acquiring an office building 102 Petty France in the Westminster district of London for £245 million ($287 million), which the company's chief operating officer says could be converted into a hotel.
While no decision has been made as to the future of the building, Arora Group COO Sanjay Arora said in an interview with CoStar News that the “No. 1 option is a hotel.”
In a news release, Landsec said the sale of the building — which it refers to as Queen Anne’s Mansions — “[crystalizes] substantial value via a deal, which is immediately accretive to Landsec’s return on equity.” Landsec developed the building, which opened in June 1976.
The building is fully leased until Dec. 2028, with Arora earning the rental fees from now until that date. Landsec added that “the majority of the valuation of the asset is linked to its future redevelopment potential, with the balance of value stepping down in line with the receipt of rental income over the remainder of the current lease.”
According to CoStar, 102 Petty France has one major occupant, the Ministry of Justice, which has leased approximately 270,000 square feet of the 354.000-square-foot property since July 2003.
Arora said he was excited about the building's future given how much history the site has. Overlooking St. James’s Park, the property was one of the last buildings to be designed by Sir Basil Spence. Arora Group now has a couple of years to work with stakeholders and bring something very special to Central London, he added.
Discussions to acquire the property with broker CBRE took a couple of years with a shortlist of potential owners, Arora said.
“When we heard of it being for sale, we jumped on it,” he said.
Arora Group also owns another site in central London, former school Heythrop College site in Kensington Square, which was built in 1750 and Arora Group acquired in Nov. 2023.
Arora added that the 102 Petty France deal indicates the next evolution of the entire Arora portfolio.
“I said 11 years ago on [my] day one, that I wanted to shape and diversify our portfolio, and we have moved into luxury country retreats, retail and golf, and we have always wanted a prime freehold London site, a flagship in central London,” he said.
Arora said Arora Group has exclusivity to buy another Central London hotel, which might be announced as early as Aug. 20.
“There are other opportunities, even if there are a lot of investors looking into hotels at the moment,” he said.
Arora Group has 12 open hotels, nine of which are 300-room-plus airport hotels spread across London in proximity to Heathrow, Stansted and Gatwick airports.
Arora Group has begun diversifying its hotel portfolio with a number of acquisitions in recent years. In December 2021, the company acquired the 228-room Luton Hoo Hotel Golf & Spa. The hotel is located 35 miles north of London and will be operated by Accor under its Fairmont Hotels & Resorts brand when it reopens following a renovation.
Luton Hoo is to close later this year to begin its major renovation. The property lost out on its bid to stage the 2031 Ryder Cup, which will instead be held in Spain. Arora said Luton Hoo plans to submit a bid to host the event in 2035.
“The idea is to make [Luton Hoo] the equivalent of or a better Gleneagles of the South. It has the perfect location, great transportation links and another activities and offerings to keep everyone happy.”
Last year, Arora Group announced a partnership with French economy brand B&B Hotels to expand that brand in the United Kingdom. As part of that deal, Arora Group a converted the 119-room Colnbrook Hotel London Heathrow Airport into the B&B Hotel London Heathrow. B&B Hotels has more than 770 hotels in 17 European countries and plans to have 100 hotels in the U.K. by 2030.
“Arora Group is growing and in the right direction. We are still a family business, and we are growing in the way we want to," Arora said.
