Singapore-based CDL Hospitality Trusts has entered Germany with the acquisition of a Munich hotel for €104.7 mln, the largest hotel single asset transaction in the city since Q3 2015.
The acquisition of the Pullman Hotel Munich which has 337 keys is being funded by debt financing, and represents a net property income yield of 5.6%.
CDL Hospitality Trusts is comprises CDL Hospitality Real Estate Investment Trust (H-REIT) and CDL Hospitality Business Trust (HBT).
'Munich is a compelling destination for our first acquisition in continental Europe, allowing CDLHT to benefit from a potential economic recovery in the region through exposure to the largest economy in Europe,' commented Vincent Yeo, CEO of CDLHT´s management firm.
To realign CDLHT’s capital structure, CDLHT has also launched a fully underwritten and renounceable rights issue to raise S$255.4 mln (€162 mln), with a view to improve its financial flexibility through reduced gearing and increased debt headroom.
'This equity fund raising exercise will strengthen our balance sheet and enhance financial flexibility, allowing CDLHT to pursue future growth opportunities, through acquisitions and asset enhancement initiatives,' added Yeo.
The four star Pullman Hotel will continue to operate under the Pullman brand, through a 20 year lease agreement with Event Hotels, a partner to H-REIT. The transaction is expected to close in July.
JLL advised the vendor in the sale of the hotel.
The property is a mixed-use complex including several office and retail units, as well as the 337-key Pullman Hotel Munich. The purpose built hotel originally opened as the Renaissance Hotel in 1986 and underwent a full renovation and rebranding to Pullman Hotel Munich in 2012.
The hotel is one of seven Pullman Hotels & Resorts in Germany and is located in one of Munich’s most flourishing sub-markets in close proximity to Parkstadt Schwabing and the new urban development Schwabinger Tor.
'This transaction highlights the sustained very strong international interest in the German hotel investment market and particularly in Munich as an investment destination,' said Stefan Giesemann, senior vice president at JLL. 'We were once again able to identify a first time hotel buyer in both Germany and Continental Europe, who was eager to secure this rare opportunity to enter Germany’s best performing hotel market with the highest barriers of entry.'
Although Munich recorded a slight dip in tourism figures in 2016, the city remains a preferred investment hotspot for national and international investors, benefitting from strong trading fundamentals and its role as key economic centre in Germany. Munich also represents the most sought-after investment market in Germany as at May 2017, having recorded 27% of all single asset transactions with a total volume of around €300 mln.
The deal follows CDLHT's acquisition of the Lowry Hotel in Salford in the UK last month, with both deals increasing the group's gearing from 36.8% to 42.6%, not including the rights issue.
