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EUR 450 million invested in German hotels in the 1st quarter – private equity capital dominates

Verena Bauer • 13/04/2022

According to research by Cushman & Wakefield (C&W), EUR 450 million was invested in German hotel properties in the first quarter. In total, C&W noted 18 transactions. Compared to a year previously, this is a decline of around 13 percent (Q1/2021: EUR 515 million). Only individual-property transactions took place with an average volume of around EUR 25 million.

Contributing some 63 percent, German investors were responsible for the majority of the transaction volume. This was followed by investors from Austria (18 percent), Great Britain (10 percent) and the USA (4 percent). With a contribution of around 43 percent, private equity investors were the most active investor type. Institutional investors, the leading investor group prior to the COVID-19 pandemic, contributed only 27 percent of the total. Private investors or family offices accounted for 23 percent, followed by real estate companies with 5 percent and developers with 3 percent.

Hotel investment market Q1 2022

As in the previous two years of the COVID-19 pandemic, operator-free sales accounted for the majority of the transaction volume at around 70 percent. Opportunistic and value-add investors, including from the private equity sector, were responsible for the biggest deal, the sale by Archer Hotel Capital and Event Hotels of the 5-star Sheraton Berlin Grand Hotel Esplanade with 397 rooms to Deutsche Finance and Cells Group for approximately EUR 116 million. The value-add investor is planning a new usage concept that includes offices, restaurants, bars and a modernised hotel. C&W acted as an advisor to the buyer.

The largest transactions in Q1 2022  also included:

  • The sale of the Smartments Business 128-apartment development project in Frankfurt to a special fund of the investment manager Aberdeen Standard Investment. The project developer and seller was GBI. Completion is scheduled for the end of 2023.
  • The sale of the Hotel Sylter Hof in Berlin with 170 rooms, part of a larger complex including residential tower and office building, to Austrian developer Soravia who plan to demolish the hotel and replace it with a new building.
  • The purchase of the Lindner Strand Hotel Windrose with 91 rooms in Wenningstedt on Sylt by the Hamburg-based Matrix Immobilien GmbH. The seller was the Paribus Group.
  • The sale of the AMBER ECONTEL Munich with 69 rooms to a family office for around 16 million euros. The seller was CA Immo. The future use is still unknown.

"Despite the rather restrained activity in the first quarter, we expect increased demand for hotel assets in the coming months, including in the corporate segment. The reasons are the lifting of the COVID-19 restrictions and the improving hotel performance. We are already seeing a lot of product on the market. This is supported by yield compression in other asset classes, but also by the increased willingness of institutional investors to reinvest in hotels, although the hurdles and requirements remain very high. The biggest obstacles continue to be the difficult financing environment and rising interest rates," comments Stefan Giesemann, Head of Hospitality Germany & Austria at Cushman & Wakefield.



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