Investor demand for quality German hotels tops 2015
Investors are still hotly pursuing German hotel assets, and are turning increasingly to project developments for lack of supply of suitable existing properties, conclude several of the bigger broker groups who track the market closley.
BNP Paribas Real Estate put the value of hotel deals done in Germany for the first nine months at €2.96bn, JLL's figure is €2.75bn, while CBRE records a total of €2.8bn – all of which puts Germany on course to top last year's record year. In particular demand are four-star hotels, which made up 46% of transaction volume in the period.
Alexander Trobitz, Head of Hotel Services at BNPPRE, says his house's figures put the market at 3% above last year's turnover at the same point. Sheima Salloum of JLL's Hotels & Hospitality Group said turnover could have been even higher this year if more single assets had become available. "In particular institutional investors, making up 70% of the buyers, but also hotel operator and private individuals are desperate to get their hands on hotel assets", she said.
A recent study from Berlin-based consultants Wüest & Partner showed that the most attractive markets for investing in new hotel projects based on a combination of growing overnight stays and high occupancy rates were Berlin, Stuttgart, Hamburg and Munich (see REFIRE Issue 148 from 20th September).
Meanwhile, several big transactions on the German hotel market are noteworthy. Sweden's Pandox has bought seven hotel properties in Europe – four in Germany (Cologne, Munich, Frankfurt and Hamburg), two in Austria (Vienna and Salzburg) and one in the Netherlands (Amsterdam)– with a total of 1,744 rooms. The acquisition price amounts to €415 million, or about SEK 4,100 million, on a debt free basis, equating to about €240,000 per room.
The high-quality full-service hotels are operated by well-established hotel operators (NH Hotels, Rezidor and Grand City Hotels) under well-known brands (NH, Radisson Blu and Park Hotel Amsterdam) with long-term revenue-based lease agreements with rental guarantee levels and shared investments, which Pandox says is the core of its business model. The hotels have an average size of 250 rooms.
France's Accor Group, Europe's largest hotel chain, is buying a 30% stake in Germany's boutique chain 25hours Hotel Company. The 25hours portfolio currently includes eight boutique hotels in Hamburg, Frankfurt, Berlin, Vienna, and Zurich. More hotels are planned in Munich, Cologne, Düsseldorf, Zurich, and Paris. 25hours CEO Christoph Hoffmann and his management team will continue to run the business.
The UK private equity group Terra Firma has bought most of the Welcome Hotels from Germany's Haus Cramer Group, which also owns the Warsteiner beer brand. The German group, which is based in Warstein in the picturesque Sauerland region in central Germany, is owned and run by the ninth generation of the Cramer family.
After mandating the Frankfurt-based investment advisory von Rothschild to evaluate the sale, the Warsteiner group will hold on to the two hotels "Landhotel & Gasthof Cramer" and the "Gästehaus im Waldpark" located in their home area. Welcome Hotels, which was founded by Warsteiner in 1998, in 2014 generated €62m in revenues, 3% up on 2013, while the company says the hotel division is profitable.
Separately, the US investment firm TPG is buying 93% of Berlin-based hotel and hostel group A&O, along with the same share in seven associated real estate companies and property management company Mecklenburgia A&O has 31 facilities in 19 cities and bills itself as the largest independent hostel provider in Europe. Founded by Oliver Winter an Michael Kluge in 2000, the company says it is growing by 25% annually and expects full-year revenue for 2016 of €120m.