US Principal Real Estate Sells 11 European Hotels for €545m

Main Photo: The Hilton Danube, Vienna

Date: September 2019

Location: Germany and Austria, Netherlands, Portugal and Italy.

Names: Mondial Hotel am Dom MGallery in Cologne, the NH Hotels in Duesseldorf and Cologne, two Mercure Hotels in Berlin and Hannover, the Intercity hotel in Leipzig and the Steigenberger hotel in Kiel and the Hilton Danube in Vienna; the Ibis Hague City centre, the Lux Hotel Lisboa Park, and the NH Hotel Turin Centre.

No. of Keys: 2,300

Seller: Principal Real Estate Europe group has sold the remaining 11 city centre hotels in Europe from its first German Special Fund.

Its Principal Real Estate Europe unit confirmed the exchange of contracts for the sale from its Principal Hotel Immobilien Spezial Fonds.

Buyer: Axa Investment Managers – Real Assets acquired the portfolio on behalf of clients in an off-market transaction.

This transaction concludes the disposal of the entire portfolio of Principal Europe’s first hotel real estate fund which first closed in 2012, and acquired 16 hotels through 2016. It started a disposal process last year that included three hotels in Amsterdam, Frankfurt and Nuremberg.

“In the 8th year of this fund’s life, this portfolio sale to AXA IM – Real Assets will mark the successful conclusion of the fund’s investment cycle which since 2012 consistently exceeded annual distribution targets and, based on the disposal proceeds from the sale of the entire hotel portfolio including this latest portfolio transaction, far exceeded its IRR targets,” Principal said.

“These results validate the fund’s core+ strategy focused on the acquisition of well located, established city centre 3-4-Star hotels in major European cities with long-term leases with strong well-known hotel groups. This strategy was supported throughout the fund’s life by various value enhancing asset management initiatives such as limited refurbishments and lease extensions which, together with good hotel market and asset selection as well as attractive financing conditions throughout the investment period, allowed the achievement of excellent returns.”

Jochen Schafer-Suren, CEO of Principal’s Hotel and Leisure Division, said the team was proud of the good results from the first fund.

“After this very successful first Principal hotel fund we will focus on investing over €400m of capital available for new hotel investments of our existing second hotel fund focused on value-add hotel investments across Europe. Furthermore, we will leverage our expertise in hotel real estate which attracts more and more investors due to its attractive long-term income generation by developing new well-designed hotel real estate investment strategies in Europe and the US as markets mature and evolve to serve investors in delivering attractive returns with institutional type-high quality hotel assets and risk return profiles.”

Principal Real Estate Europe is part of the Principal Financial Group, which manages global assets of $451.7bn, including real estate amounting to $82.8bn. The group is headquartered in Des Moines, Iowa. Principal Real Estate Europe has offices in London, Frankfurt, Amsterdam, Paris, Lisbon, Luxembourg, Madrid and Milan.

Axa have €2.3 billion of assets under management invested in over 70 hotels across 10 countries,

Price: €545m

Price per Key: €236,956

THPT Comment: Interesting, albeit varied group of hotels in key cities in Europe. Not a bad price for the buyer.

First Seen: Business Immo

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