Aroundtown features in prominent German hotel deals
Listed German commercial real estate investor Aroundtown featured in two prominent German hotel deals this month, as part of its almost frenetic acquisition and disposal strategy since taking a full German stock exchange listing last year.
Firstly, it bought the five-star, 473-room InterContinental Hotel Frankfurt on Wilhelm-Leuschner-Strasse not far from the main train station. The seller was Qatari group Katara Hospitality, which bought the hotel in 2014 along with three other InterContinental hotels in Europe.
The 26,000-sqm riverside high-rise was built in 1961 and has been looking a bit tired for years, for those who know downtown Frankfurt. Aroundtown has already begun carrying out repairs to the facade, but intends to replace it completely in the near future. Several building permits applications have already been submitted to the city. Plans include renovation of the rooms, lobby and conference area as well as a reopening of the indoor pool and spa facilities.
The hotel previously consisted of two towers, whose north tower was acquired by Aroundtown's minority-owned fellow-listed subsidiary Grand City Properties in 2012, and repositioned by Aroundtown, before selling it as a four-star 293-room Scandic Hotel to the Israeli group Sh.i.r. Asset Management.
Aroundtown was also the buyer of the 601-room Hilton Hotel on Gendarmenmarkt in Berlin in a share deal worth €297m from US hospitality REIT Park Hotels & Resorts.
Park Hotels & Resorts has been on a selling spree recently aimed at recycling capital out of non-core assets and reducing exposure to international markets as well as joint venture interests. The Hilton Berlin sale represents the 13thhotel sold by the group so far this year, leaving it with ownership in only four hotels now outside the US.
Thomas Baltimore, Jr., chairman and CEO of Park Hotels & Resorts, said, We have been laser-focused on reshaping our portfolio and maximizing value for our stockholders, and we are pleased that this sale helps to reduce our exposure to international markets, while further simplifying the ownership structure of our assets. Since the start of the year, we have successfully sold over $500m in non-core assets. "
Meanwhile, Cologne-based Art-Invest Real Estate bought the four-star conference hotel Maritim Cologne on behalf of its Hotel Manage-to-Core fund. The seller was Commerz Real's CFB 111 closed-end real estate fund, which had owned the property for the last 20 years. Commerz Real said that its investors in CFB 111 had seen a total return flow of funds of more than 340% of the nominal investment across the entire term of the shareholding, corresponding to a return of 8.3% per annum before taxes.
The property is thought to have been valued at about €120m. The sale is being financed by a syndicated loan from BayernLB, Sparkasse Köln Bonn and Stadtsparkasse München.
The Maritim Cologne was completed in 1988/1989 and has seven above-ground floors with some 55,000 sqm of leasable space, including 454 hotel rooms and suites, several restaurants, an extensive conference area with 22 rooms, the largest hall on Cologne’s hotel market with a capacity of as many as 3,400 people, and a car park with 550 parking spaces. Operator Maritim Hotelgesellschaft has agreed a lease until the end of 2027.
Separately, British hotel group Whitbread said it intends to convert the 13 hotels that it took over from Foremost Hospitality at the beginning of the year into full Premier Inn hotels within the next two years.
Chris-Norman Sauer, head of acquisitions responsible for the German market, said that Germany is the key expansion market for the British market leader, and will define the success of the brand. By 2020, the group intends to open 18 more Premier Inn hotels, of which six are developments taken over from Foremost. "We still see great potential for the budget economy sector, particularly in the B- and C-rated cities,” Sauer added.
Unusually among other operators or brands, Premier Inn targets holding 50 % of its hotel buildings in its own portfolio, so Sauer is also scouring the market for existing buildings that are suitable for development, conversion, or mixed use.