A PROPERTY fund backed by Sir Alex Ferguson has bought the Palace Hotel, Manchester, as part of a é290m deal. It is the second time in under four months that the 257- bedroom city centre landmark has changed hands.

Private equity firm Permira bought the Palace's parent group, Principal Hotels, from Royal Bank of Scotland in September.

Now it has sold the Palace and five other four-star hotels to Active Asset Investment Management, in which Manchester United boss Sir Alex is a major investor.

The other hotels are the Met in Leeds, the Royal York in York, the George in Edinburgh, the Russell in London and the Selsdon Park, Croydon.

London-based aAIM has acquired the properties on 25-year leaseback arrangements. Principal will continue to operate the sites. The deal takes the value of aAIM's portfolio to more than é1bn.

In October, it bought regional hotel chain Menzies for é190m. Its other investments include the European headquarters of electronics giant JVC in London, the National Trus t's HQ in Swindon and two retail parks in Poland.

Launched in 2003, aAIM's investors include soccer stars Ryan Giggs, Alan Smith, John Terry and Frank Lampard, pop group The Corrs and TV interviewer Sir David Frost.

Chief executive Robert Whitton told the M.E.N.: "We really like the hotel sector - we believe it represents good value, and we are looking at making further acquisitions next year.

"The Palace and the other hotels are all very well known and in prime sites. It will be business as usual for staff and guests."

The Palace, a Grade II listed building, dominates the corner of Oxford Road and Whitworth Street. Built as the opulent headquarters of the Refuge Assurance Company, the hotel has undergone multi-million pound refurbishments in recent years but retains grand features such as its turrets, 220ft-high clock tower, terracotta exterior and tiled halls. The sale to aAIM mirrors a market trend for hotel companies to sell their property assets and focus on operations. Recently Sir Rocco Forte put his luxury Lowry Hotel in Salford on the market, with plans to use the sale proceeds for expansion in Europe. Rocco Forte Hotels will continue to manage the property long-term.

Meanwhile, Royal Bank of Scotland has struck a é1.1bn deal to sell 47 Marriott hotels across the UK, including five London sites, to a subsidiary of Israeli property firm Delek Real Estate. Tweet