Morgan Stanley makes first investment in European budget hotels

Morgan Stanley Real Estate's Special Situations Fund III has agreed to acquire a 35% stake in Motel One Management, the holding company of the fast-growing budget hotel chain in Germany, for an undisclosed amount. The planned investment will be Morgan Stanley Real Estate's first investment in the budget hotel sector in Europe.

The Special Situations fund will acquire the stake through the acquisition of existing shares from current shareholders of Motel One AG and through a dedicated capital increase. Motel One will retain a 65% equity stake. The objective of the partnership between Morgan Stanley Real Estate and Motel One is to support the strategic development and pan-European expansion strategy of Motel One, according to a joint statement issued by the parties.

Commenting on the transaction, John Carrafiell, global co-head of Morgan Stanley Real Estate Investing, said: 'We are very excited to partner with Motel One and to support its growth strategy in Germany and key European city centers. Motel One is a dynamic company experiencing robust growth, led by a deeply experienced and entrepreneurial management team that has a uniquely new and exciting approach to the budget hotel business. We believe that Motel One is very well positioned to capitalize on the attractive opportunities for the sector in both Germany and other CEE city centres.'

Munich-based Motel One was established in 1999 and operates 17 hotels with a total of 2,300 rooms. Contracts have been signed for the further growth of the group to 28 hotels and more than 5,000 rooms.