Q3 DEALS: Asians and Qatar snap up European hotels

Investors from Asia and Qatar dominated the largest European hotel investment transactions on the buy side in the first nine months of 2015, while US-based firms were prominent as vendors, according to data analysed by PropertyEU Research.

TOP EUROPEAN HOTEL DEALS
First 9 months of 2015

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1. Brookfield Property Partners agrees to acquire €3b UK holiday resort group
2. Qataris lift ownership of iconic London hotels to 100% for €2.2b
3. Starwood finalises sale of Louvre Hotels to China's Jin Jiang
4. Singaporean investor picks up UK boutique hotel chain for €508m
5. Hispania launches €420m hotel REIT with operator
6. Constellation closes €330m purchase of iconic Paris hotel
7. Italian insurer buys Una hotels for €287m
8. Accor divests 29 German and Dutch hotels in €234m leaseback deal
9. Qataris buy Westin Excelsior Rome for €222m
10. Starwood sells London hotel for €207m

Source: PropertyEU Research
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Brookfield Property Partners, the Canadian-US real estate heavyweight, carried out the largest single investment in the hospitality sector by acquiring UK holiday resort Group Center Parcs from funds managed by Blackstone’s private equity and real estate businesses, for €3.3 bn in June.

This deal is generally viewed separately to the pure hotel investment market which is seeing a big surge in activity this year. CBRE's hotels division reports that investment in the European hotel sector for the second quarter of 2015 alone came to €5.6 bn, up 37% year-on-year. The broker forecasts total spend on European hotels could reach €20 bn by year-end with both large portfolios and the most luxury assets changing hands.

Qatar
Qatar's sovereign wealth fund, QIA, is maintaining its reputation as one of the largest investors in the luxury hotel sector in key European cities and was the most prolific investor in terms of the number of large deals from January to end-September 2015. QIA and its subsidiaries, Constellation Hotels and Katara Hospitality, shelled out €2.8 bn in separate deals to gain control of Claridges, the Berkeley and the Connaught in London, Le Grand in Paris and the Westin Excelsior Rome.

These investments rank respectively in second, sixth and ninth place in PropertyEU Research's list of the largest hotel transactions of the period.

The Chinese are staying
Equity from Asia is also becoming an increasingly important factor in the European hotel investment market.

Chinese hospitality conglomerate Jin Jiang International Holdings secured the number three spot in the deal ranking when it closed the acquisition of the Groupe du Louvre hotel business from US-based private equity group Starwood Capital Group. The investment volume was rumoured to be somewhere between €1.2 and €1.5 bn. Louvre is the second largest hotel group in Europe, with a network of more than 1,100 hotels (over 90,000 rooms) in 40 countries worldwide.

In November 2011, Louvre Hotels Group and Jin Jiang International Holdings established a commercial partnership which introduced a co-branding programme to selected hotels in major cities of China and France. The partnership aimed at building up public awareness of Louvre and Jin Jiang in each other's home markets and boosting hotel tourism between the two countries.

The hospitality arm of Singapore-listed property investor Frasers Centrepoint Limited (FCL) took a major position in the lucrative UK market in June when it completed the acquisition of a chain of 29 boutique hotels in the UK for £363 mln (€508 mln).

Frasers Hospitality UK Holdings Limited, a wholly owned subsidiary of FCL, acquired the Malmaison Hotel du Vin group (MHDV) from US-based private equity firm KSL Capital Partners.

MHDV owns two upscale boutique lifestyle brands – Malmaison and Hotel du Vin – comprising 29 boutique lifestyle hotels and 2,082 keys across 25 cities in the UK.

'FCL’s strategy remains focused on achieving balanced growth across asset classes and diversifying our earnings profile. This acquisition is important as it doubles our offerings in Europe to about 4,000 keys and it propels Frasers Hospitality to be one of the leading hospitality players in this market.' said Lim Ee Seng, Group CEO of FCL.

Domestic investors
European-based investors also feature in the list of top 10 deals, with both mature markets and recovering, albeit traditional tourist destinations being targeted.

In April, French hotel giant Accor divested a 29-asset portfolio of German and Dutch hotels in a €234 mln sale-and-leaseback transaction less than a year after requiring most of the properties. German company Event Hotels, one of Accor's main franchisees, took possession of the portfolio before the end of the summer. Event Hotels agreed to pay €209 mln for the portfolio and committed to a €25 mln renovation plan.

Two months earlier Hispania signed a deal with hotel and resort operator Grupo Barceló on creating Spain's first hotel REIT focused on the holiday resort segment.

Hispania agreed to acquire a portfolio of 11 four-star hotels with a combined 3,946 rooms and one shopping centre in an initial stage. At a later stage, the Spanish REIT will have the option to acquire five additional hotels offering 2,151 rooms and a second shopping centre. Once the transaction is finalised, Hispania will have invested €339 mln in the company in exchange for an 80.5% stake.

In Italy, insurer Unipolsai's Atahotels and Athens RE fund took over the insolvent Una hotel chain during June in two separate transactions for a total of €287 mln. The hotel chain operates 21 hotels and owns 16 of them.