Swedish listed property group Pandox said on Friday that it has entered into an agreement to acquire seven hotel properties with a total of 1,532 rooms in Germany from HR Group in a share deal worth €290 mln on a debt free basis.
The acquisition is expected to be financed by liquid funds and new bank loans and is planned to close in the fourth quarter of 2019.
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 €16.5 mln in rental income and €16.4 mln in net operating income, on an annualised basis.
'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 acquisition also further reinforces Pandox’s market position in the largest hotel market in Europe,' says Anders Nissen, CEO of Pandox.
The assets are Dorint am Main in Frankfurt, Mercure Hotelin Munich, Pullman Stuttgart Fontana in Stuttgart, Dorint Parkhotel in Bonn, Mercure Hotel in Frankfurt Eschborn, Mercure Hotel at Frankfurt Airport and Mercure Hotel in Schweinfurt.
The acquired hotel property portfolio has a yield of 5.7%, before transaction costs.
Pandox and HR Group have agreed on a joint investment programme of €20 mln, of which Pandox’s share amounts to €15 mln to upgrade existing hotel rooms, bathrooms and public areas as well as creating more hotel rooms in existing hotels.
HR, an owner managed company founded in 2008, is also a minority owner in Pandox with a 5.1% stake.
In the last six months, Pandox has entered into four agreements to acquire a total of 13 hotel properties with a total of 2,834 rooms in strong regional city hubs in Germany and the Netherlands. The total acquisition value amounts approximately €537 mln with an initial yield in the range of 5.4-6.5%.
Following closing, the hotel property portfolio will consist of 156 hotels with approximately 35,000 rooms.