Pandox Buys seven Accor and Dorint branded hotels in Germany for €290m

Main Photo: The Dorint Hotel Main Tannus Zentrum Frankfurt

Date: November  2019

Location: Bonn, Frankfurt, Munich, Schweinfurt and Stuttgart

Name: Four Mercure, Two Dorints and a Pullman

No. of Keys: 1,532

Seller: HR Group, an owner managed company founded in 2008. Since then they have become one of the fastest growing hotel owner/operator companies within Central Europe and one of the leading hotel operators in Germany. Today, the group’s portfolio stands at 34 properties with more than 4,800 keys in Germany, the Netherlands and Spain.

Most of the hotels are branded with major players such as Accor, Wyndham, Hyatt and Dorint.

Buyer: Pandox AB has entered into an agreement to acquire seven hotel properties with a total of 1,532 rooms in Germany from HR Group. The total transaction value amounts to approximately €290m, excluding minority interests. The acquisition is expected to be financed by liquid funds and new bank loans.

The hotels will continue to be managed by HR Group under fixed leases with indexation, which will be converted into revenue-based leases by 2024 at the latest. The hotels are expected to contribute approximately €16.5m in rental income and €16.4m in net operating income, on an annualised basis. The acquisition is expected to close during the fourth quarter 2019.

“The acquisition is industrially sound and complements Pandox’s portfolio well both geographically and brand-wise and deepens our cooperation with the fast-growing HR Group. The hotel properties have strategic locations in stable domestic cities in Germany and are mainly driven by domestic demand with a good balance between the business, meeting and leisure segments.

The hotels are full-service hotels in the upper mid-scale segment with an average size of 219 rooms with clear development and growth potential. The acquisition also further reinforces Pandox’s market position in the largest hotel market in Europe.”, says Anders Nissen, CEO of Pandox.

“HR Group is pleased to develop its strategic cooperation with Pandox, which is one of the leading hotel property companies in Europe. The transaction marks an additional key milestone in HR Group’s successful growth history to become the leading white-label hotel operator in Central Europe. We look forward to continuing to operate and develop the seven hotels together with our teams with the objective to create even better guest experiences.”, says Ruslan Husry.”, CEO of HR Group.

The acquisition of the hotel properties is made by indirect acquisition of shares in companies with an underlying property value of €290m on a debt free basis. The acquired hotel property portfolio has a yield of approximately 5.7 percent, before transaction costs. HR Group remains as a minority owner with 5.1 percent.

HR Group will operate the hotels initially under fixed leases indexed by 2 percent per year. The agreements will be converted to revenue-based leases with good minimum guaranteed levels, and a lease-term of at least 20-years, by the year 2024 at the latest. The tenant has a far-reaching responsibility for maintenance, repair and investments in the properties.

Pandox and HR Group have agreed on a joint investment programme of €20m, of which Pandox’s share amounts to €15m. The investments are primarily focused toward upgrading of existing hotel rooms, bathrooms and public areas as well as creating more hotel rooms in existing hotels.

Pandox’ hotel property portfolio will consist of 156 hotels with approximately 35,000 rooms, of which 38 hotels with approximately 8,400 rooms in Germany which is the largest hotel market in Europe.

Price: €290m

Price per Key: €189,295

THPT Comment: In the last six months, Pandox has entered into four agreements to acquire a total of 13 hotel properties – 11 in the business segment Property Management and two in the business segment Operator Activities – with a total of 2,834 rooms in strong regional city hubs in Germany and the Netherlands. The total acquisition value amounts approximately €537m with an initial yield in the range of approximately 5.4-6.5 percent.

First Seen: Pandox website

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