Bengaluru: Real estate firm Embassy Group has bought a 73.4% stake in Mac Charles Hotels Pvt. Ltd, owner of Bengaluru’s Le Meridien hotel, for Rs640 crore in what is being seen as the first significant hotel deal this year.

Embassy Group bought the stake on Friday from investor C.B. Pardhanani in a deal which values the firm at Rs870 crore. The property developer will make an open offer to investors on Monday for the rest of the shares at Rs670 per share.

The Le Meridien faces a golf course and has 197 rooms and 30 suites. “Right now, we will bring the hotel under our hospitality vertical and run it for some time. Eventually, we may turn it into office space or a residential tower," chairman Jitu Virwani said.

Mint could not immediately reach Pardhanani.

The Embassy Group, which has been expanding its hotels portfolio, said this month it will invest Rs650 crore to develop its second hospitality project, a 560-room hotel in north Bengaluru to be managed by international chain Hilton Worldwide Holdings Inc. The firm owns a 247-room Hilton Hotel at the Embassy Golf Links park in east Bengaluru.

“This will be the first significant deal in a rather quiet year, though discussions have been on for other transactions. Hopefully, this should be a trigger for more deals to happen in the months to come," said Mandeep Lamba, managing director, India, Hotels and Hospitality Group, JLL.

The market for hospitality investments showed reasonable appetite for growth last year. However, 2016 has so far been quite dull in terms of hotel buyouts, particularly compared with 2015 which saw as many as nine deals, the highest in a while, according to property analysts.

Among the major deals of 2015 was the acquisition of Leela Hotels’ Goa property by Malaysia-based conglomerate MetTube Sdn Bhd for Rs725 crore and ITC Ltd’s acquisition of Park Hyatt Hotel in Goa for Rs550 crore. Blackstone Group LP-backed Embassy is one of the largest commercial office developers in the country and recently applied for regulatory approval to register a real estate investment trust for its office assets.

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