Schroders Checks in to Hotel Market with Algonquin Buy
Date: May 2018
Location: 43 hotels across Europe
Name: Various brands including Westin, Sheraton, Hyatt, Radisson and Sofitel.
The Westin Venice, one of the 43 hotels acquired
No. of Keys: 7,500
Seller: Algonquin, a €1.8bn (£1.6bn) hotels business that owns and manages a string of top hotels across Europe. Algonquin, founded in 1998, with offices in Paris, London & Brussels, whose founder is Jean-Philippe Chomette said “that joining Schroders would provide the company with access to new assets, a broadly based real estate team with 13 offices across five continents and an enhanced proposition for clients”.
Frédéric De Brem, chief executive of Algonquin, is set to join Schroders as head of Schroder Real Estate Hotels.
Algonquin’s hotels are spread across Europe but about half the portfolio by value is in France.
Some of the larger hotels in the portfolio include Explorers at Disneyland Paris, Sheraton Warsaw, Sheraton Rome and Westin Venice.
As part of the deal, Schroders is acquiring various co-investments alongside Algonquin’s existing clients.
The vendors were advised by Rothschild and Gide.
Buyer: The acquisition of Algonquin marks Schroders’ first strategic move into the hotels sector and comes less than a year after the fund manager entered another new market, with the purchase of The Self-Storage Company.
Duncan Owen, global head of real estate at Schroders, said Algonquin would be complementary to its existing real estate business, which has about £13bn in assets under management.
Algonquin has a “wonderful performance track record”, he said, adding that “at this stage in the cycle it makes sense to be invested in assets where you have greater control, so you can respond quickly to changes in the market”.
One of the key points that Algonquin claims sets it apart from others is “its ability to get actively involved with its hotels’ operations”. The company also looks to add value through refurbishment and has developed new hotels.
Other attractions of the deal for Schroders include the high income returns on offer in the hotels sector and the access it will give the fund manager to new investors.
“Their client base includes some of Europe’s largest financial institutions and the quality and experience of its employees are some of the principal reasons why Schroders is acquiring the business,” said Owen.
Schroders was advised by d’Angelin & Co, Allen & Overy, PwC and CBRE Hotels.
Price: €1.8bn
Price per Key: €240,000
THPT Comment: The European hotel market has been unbelievably active this year thus far…with this deal following on from Fonciere des Regions just this last month to acquire a portfolio of hotels from Starwood Capital.
Last year saw 261 acquisitions of European hotels and hotel operators, according to analysis of Dealogic data, the highest annual number of deals on record. At $12.3bn the value of those transactions was the second-highest in the past decade.
First Seen: Property Week