Hotels investment market remains highly subdued
It's still all very quiet on the hotel investment front in Germany, with the major property brokers reporting a very subdued transaction volume of at most €260m over the first quarter. This puts it at about 60% below the 10-year average.
However, even these figures were mightily skewed by the inclusion of one huge deal - the sale of the five-star, 145-room Hotel de Rome in Berlin for around €145 million from the Singaporean sovereign wealth funds GIC and Caleus to the Italian investor Gruppo Statuto, making it by far the largest deal in the first three months. In fact, only five further transactions were recorded for hotels above the €5 million mark.
According to Cushman & Wakefield, prime yields have remained unchanged compared to the end of 2023, remaining at 5.50%. In the 1st quarter of 2023, the hotel prime yield was 4.80%.
Josef Filser, Head of Hospitality Germany & Austria at Cushman & Wakefield said: "With the exception of the Hotel de Rome transaction, activity was primarily limited to smaller and operator-free sales. We expect a slight improvement in transaction activity in the second half of the year with some larger deals in the marketing or review phase. In addition, lower prices and stabilising interest rates are making investment in the sector attractive again. Private equity investors and family offices will provide the bulk of the capital here."
Several brokers said they were seeing increasing convergence between buyers and sellers on asking prices, and said they were registering renewed interest and activity in the market. Additionally, business and trade fair tourism is continuing its steady recovery after the COVID years, while the sector should get a useful boost from the European Football Championships this summer.
The largest deals in Q1 2024 included:
● The sale of the 145-room "Hotel de Rome" in Berlin by the Singaporean sovereign wealth funds GIC and Caleus to Italian investor Gruppo Statuto for around EUR 145 million. The operating lease with the Rocco Forte Group is about to expire.
● The sale of the 109-room B&B Hotel Frankfurt West to a special AIF managed by Imaxxam for Union Investment Institutional Property. The lease with B&B runs until 2042. The seller was Frankfurt-based a.a.a. Aktiengesellschaft Allgemeine Anlagenverwaltung.
● The sale of 30 Numa serviced apartments via a residential and commercial building transaction involving Am Wehrhahn 43 in Düsseldorf to the family office Wilhelm von Opel'sche Forst- und Grundstücksverwaltung. The seller was developer Atenor.
Bank lenders returning to the sector
Separately, some lenders are returning tentatively to the sector. Speaking recently at the MIPIM event in Cannes, pbb Deutsche Pfandbriefbank's Head of Germany Gerhard Meitinger said his bank was again looking at the beleagurered sectors of retail and hotels. On hotels, he said: 'We stopped financing hotels during the pandemic and now we are seeing opportunities again. As with retail, the prices are low and this could be a good opportunity. We are talking to potential investors about established hotels which we prefer to new ones.'
Meitinger said that he expected margins for strong hotels and shopping centres to more likely be in the range of 250-350 basis points compared to the bank's average margin last year of 210 bps. Pbb is targeting €6 billion-€7 billion of new loans (including extensions of over one year) in 2024 and lent €7.2 bn in 2023 (€9 bn in 2022).