Hong Kong firm buys Champs-Elysees hotel for €344m

In the latest of a string of high-profile acquisitions by Asian investors in Europe, Hong Kong-listed investment firm Kai Yuan Holdings has agreed to buy the Paris Marriott Hotel Champs-Elysees for €344.5 mln.

JLL Hotels & Hospitality Group advised the vendor, French real estate company MCE PropCo.

To finance the deal, Kai Yuan will receive a $280 mln loan from shareholder Du Shuanghua, who owns a 5.54% stake in the company. Additional funding will come from internal resources and bank borrowings, with the transaction due to be completed by September 5 at the latest, the company said in a stock exchange filing.

The price compares to a valuation of the asset per April 2014 of between €323 and €342 mln.

Located on avenue des Champs-Elysees in the 8th arrondissement of Paris, the five-star hotel provides 17,720 m2 of space over 192 rooms. It has had an average occupancy rate of 88% over the past three years.

'The group believes there is potential to attract more Chinese customers and further improve the current occupancy rate,' Kai Yuan said in a statement. 'The board has high confidence in the management of the hotel by the Marriott group.'

The initial term of the management agreement expires in 2030, with automatic renewal.

A wave of Asian investment is heading for Europe with a strong focus on luxury assets. Earlier this month, Chinese property and entertainment conglomerate Dalian Wanda Group bought one of Madrid's highest towers from lender Banco Santander for around €265 mln.

Located at Plaza de España, one of Madrid's main squares, the 117-metre high scheme was bought by Santander in 2005 for €389 mln from listed property firm Metrovacesa.

The 67,400 m2 building, which formerly housed a Crowne Plaza Hotel, a shopping centre, apartments, and offices, has since been vacant awaiting renovation into luxury residences.

Dalian Wanda Group plans to redevelop the 25-storey scheme into a shopping centre, luxury hotel and 300 luxury apartments according to a design by Norman Foster and Carlos Lamela.

The deal is the first in Spain by Dalian Wanda Group, a conglomerate run by China's richest man, Wang Jianlin. Last November, the group announced plans to invest £700 mln in the acquisition and redevelopment of the One Nine Elms mixed-use site in London's South Bank regeneration area.