Deka Immobilien is investing €158 mln on the Le Méridien hotel in central Munich in the country's single largest hotel transaction in over 15 years.
Deka Immobilien is investing €158 mln on the Le Méridien hotel in central Munich in the country's single largest hotel transaction in over 15 years.
Deka, acting on behalf of its Deka ImmobilienEuropa open-ended property fund, is buying the 381-room hotel from Kildare Partners, which bought the asset last year as part of a €1 bn portfolio acquisition from Deutsche Bank.
Kildare, which was set up by Ellis Short, former head of Lone Star Asia, took control of the Mars package consisting of 24 offices and two hotels, Le Méridien Parkhotel Frankfurt and Le Méridien Munich, in May last year.
The transaction represents Germany's second largest single asset hotel transaction ever after the sale of the 1,020 room Sheraton Hotel Frankfurt Airport in 1998.
Opened in 2002, the hotel is located opposite Munich’s main train station and is operated by Starman Hotels on a long-term agreement. As well as 381 rooms and suites, the hotel offers a restaurant, conference and meeting facilities, a spa and a courtyard.
'The sale was a very competitive process, with strong interest from a number of cross-border investors from Europe, US and Asia. Given the underlying deal structure, this sale additionally showcases that institutional capital is getting more and more flexible as a result of the current pressure on yields,' said Sheima Salloum, senior vice president at JLL Hotels & Hospitality Group, which advised on the deal.
'We have advised on, bought and sold this hotel three times over the past fifteen years, and each time there has been a significant increase in price. This is due to the positive underlying market and asset fundamentals but also demonstrates why hotels as an asset class are increasingly in demand from a variety of investors,' added Christoph Härle, CEO EMEA, JLL Hotels & Hospitality Group.
The hotel was initially acquired in 2007 as part of the Mars package by Amsterdam-listed Eurocastle Investment, a vehicle externally managed by US private equity firm Fortress, for €2.1 bn. It was acquired from DB Grundbesitz-Invest, an open-ended fund run by Deutsche Bank’s property fund arm DB Real Estate.
Europe's higher-yielding hotel investment market has seen a strong surge in activity recently. According to broker JLL, close to $25 bn in hotel trades are expected to take place in 2015, a rise of nearly 20% on last year's volume of $21.5 bn.