EUROPE - Hotel transactions topped €7bn last year, largely as a result of large deals pushing a 9% increase over the previous year, according to a report published this week by consultancy HVS.
Although a couple of portfolios came to market, including the 28-asset UK-dominated portfolio put up for sale by collapsed firm von Essen, the majority (54%) of the 116 transactions closed last year were single-asset deals.
The UK was the most active market for single assets, with total volumes of more than €1bn involving 32 hotels.
London dominated sales, accounting for 62% of single-asset transactions in the UK and 16% in Europe.
Germany came in second, accounting for 19% of the European total.
Deals included Invesco European Hotel Real Estate Fund's acquisition of the Novotel Hannover for an undisclosed price.
The fund also acquired a portfolio of five German and Austrian assets from NH Hoteles for €170m.
Analyst Lucy Payne noted that, despite Abu Dhabi Investment Authority's €215m acquisition of the Marriott Champs-Elysées and Verny Capital's acquisition of the Moscow Ritz-Carlton, fewer transactions involved high-end assets compared with the previous year.
Portfolio transaction activity accounted for €3.2bn of a quarter of sales last year, a 3% increase over the previous year.
Significant deals included Blackstone's acquisition of the £600m (€691m) Mint hotels portfolio and Morgan Stanley Real Estate Fund's disposal of a seven-strong InterContinental portfolio for €450m.
Major portfolio sellers last year included Accor, which sold two German Mercure hotels for an undisclosed price and seven French Suite Novotel hotels to a consortium of French institutional investors for €77m.
Among buyers, institutional investors and hotel operators accounted for 78% of sales across Europe.
Institutions - including pension funds, insurers such as the Cooperative Insurance Society and the Swedish Order of Freemasons - accounted for 26% of single-asset deals and 21% of portfolio acquisitions.
Private equity companies, previously negligible investors, doubled their acquisition activity.
Payne attributed bullish investment activity to increased business and leisure demand across Europe and "considerable interest" generated by distressed assets coming to market.
But she warned that the increase in distressed assets coming to market widely predicted over the past two years had not materialised and was "unlikely to be dramatic" in 2012.
"The European hotel transactions market is expected to show modest growth in 2012, but, with debt hard to source, it faces a long, hard journey before investment returns to pre-credit crunch levels," she said.
