Sweden's Pandox buys German hotel interests of Leopard, Fattal

The Swedish hotel owner Pandox has just bought a portfolio of 18 hotels in Germany from Israeli hospitality groups Fattal and UK-based Leopard for SEK 3.7bn (€400m), at an initial yield of about 6.3%.

The 3,415-room package was acquired in a joint venture with Norwegian group Eiendomsspar, which has taken a minority stake of 5.1%.

The hotels are positioned in the upper mid-market segment and are primarily marketed under the Leonardo Hotels brand. Pandox has signed new 25-year revenue-based lease agreements with Fattal Hotels for all of the hotels.

Located across 12 German cities, the hotels have either recently been refurbished or are currently under refurbishment. They are all full-service hotels in the upper mid-market segment, with an average size per hotel of 190 rooms. Pandox said it expects the portfolio will contribute the equivalent of SEK 150m in cash earnings in 2016.

According to Pandox CEO Anders Nissen, "The acquisition fulfils all Pandox’s strategic criteria as regards size, city, location, market position and profitability, and strengthens our position on the important German market. The transaction is also completely in line with Pandox’s business model, which is based on long-term lease agreements. Furthermore, Fattal Hotels is a new strong long-term partner and the hotels have good development potential."

Financing of the deal was by a new and agreed five-year bank loan, existing bank loans and existing liquid funds, said Pandox. The deal, which is expected to be completed by the end of 2015, increases the value of Pandox's portfolio from SEK 27.7bn to SEK 31.4bn.

The hotels in the portfolio are:

Leonardo Royal Frankfurt

Holiday Inn Frankfurt Airport North

Leonardo Royal Düsseldorf Königsallee

Leonardo Hannover Airport

Leonardo Wolfsburg City Center

Holiday Inn Düsseldorf Airport

Leonardo Hamburg City Nord

Leonardo Hannover

Leonardo Köln-Bonn Airport

Leonardo Heidelberg

Leonardo Heidelberg-Walldorf

Leonardo Royal Köln am Stadtwald

Leonardo Mannheim City Center

Leonardo Karlsruhe

Leonardo Düsseldorf City Center

Leonardo Mönchengladbach

Leonardo Royal Baden-Baden

Leonardo Aachen