CapMan sets up EUR 835m hotel fund, buys 39-hotel portfolio

Scandinavian fund manager CapMan has launched a new private equity real estate fund, CapMan Hotels RE Ky. The fund signed on Friday an agreement on the acquisition of a hotel portfolio consisting of 39 properties from Northern European Properties (NEPR). The transaction volume was EUR 805 mln.

CapMan Hotels RE Ky fund reached EUR 835 mln at first closing and the fund targets a maximum size of EUR 1.1 bn. 17 Finnish institutions have committed EUR 292 mln of equity into the fund, with the balance comprising senior debt. CapMan Hotels RE Ky is open to new investors for twelve months and the maximum amount of equity capital will be EUR 400 mln. The fund is managed by CapMan Hotels RE Oy, which is owned 80% by CapMan and 20% by Corintium Oy. The launch of the new fund raises the total capital managed by CapMan by some 27% to approx. EUR 3.8 bn.

CapMan said that the new fund focuses on hotels especially in Finland and Sweden. The fund invests both in existing hotel properties and in new hotel development projects. The fund agreed to buy from NEPR four holding companies that own 39 hotel sites. The transaction, subject to approval by competition authorities, is expected to be closed by end-February 2008. Some 38 hotels are located in Finland and one in Sweden. Major hotel chains operating in the properties comprises Rantasipi, Cumulus, Sokos Hotels, Scandic and Holiday Club while the hotels are principally leased to hotel operators Restel, SOK and Scandic.

The gross lettable area of the portfolio comes to 408,994 m² with 6,477 hotel rooms in all. The largest hotels in the portfolio are the Crowne Plaza Hotel in Helsinki and Holiday Club Åre in Sweden. The cash flow weighed average maturity of the hotels' lease agreements exceeds 14 years and the hotel premises are fully let.

'Our objective is to complement the portfolio with new investments,' said Markku Hietala, head of CapMan Real Estate. The fund is CapMan's third private equity real estate fund, and follows on the launch of CapMan Real Estate I in 2005 and CapMan RE II in 2006. Commitments in the three funds reach a total of EUR 1.9 bn.

Listed real estate investment firm NEPR said it has sold its Nordic portfolio of hotel properties to focus its real estate investment business on Russia and the Baltic countries.

Additionally, CapMan Real Estate said on Friday that it has signed a letter of intent with Holiday Club Resorts Oy for the development in the coming years of four spa hotel projects in the Nordic countries. The planned resorts are located at Himos and Saimaa in Finland and Västervik and Öresund in Sweden.