Own

Motel One shifts leases to owned

Motel One has acquired two hotels in Germany from Lloyd Fonds for an undisclosed price, having previously operated them under long leases.

The company’s pipeline currently comprises 24 hotels, of which 65 percent are under long-term leases, as it looks to expand outside its domestic market.

With the opening of One München-Olympia Gate earlier this year, Motel One’s owned portfolio grew to 12 hotels. The brand is continuing to become increasingly international: it added four hotels outside Germany, taking it to 14 sites.

The hotels sold were the Motel One Berlin-Tiergarten in Berlin and the Motel One Nürnberg-City in Nuremberg. Real estate fund Moderne Großstadthotels, initiated by Lloyd Fonds in 2008, held the hotels. 

The fund said: “Lloyd Fonds was one of the first fund initiators to discover the trend in favor of budget hotels and to make the projects of the Motel One Group, which was still young at the time, available to investors.”

The two hotels were acquired at a multiple of 14.6 times the net annual rental. Lloyd Fonds has now sold them at a multiple of around 19.8 times.

“German real estate, particularly also hotel buildings, are currently attracting very strong interest," Torsten Teichert, CEO, Lloyd Fonds, said. "The current sales price, which is around 42 percent up on the original purchase price, testifies impressively to the quality of our funds and our professional asset management. We have been able to achieve an outstanding result for investors. We are very pleased about this. As Lloyd Fonds participates in the fund's performance via a contractual arrangement, we have also been able to secure a substantial contribution to our earnings from this transaction.”

The deal came shortly after the company announced its first quarter results, which saw revenue rise by 16 percent on the year, reaching €74 million. Due to weaker returns on sales EBITDA rose by only 5 percent, reaching €17 million.

The company said: “The decline in earnings was due to weaker returns on sales compared with the previous year, caused by the newly-opened international hotels and their strong dependence on seasonal business. Also, compared with the year before, the result was adversely affected by €1.5 million-worth of immediate depreciations on investments in new openings and refurbishments.”

“The downturn caused by seasonal shifts in the first quarter of 2016 is likely to be largely compensated for by good performance in April," the group commented, prior to the Brexit. "As regards markets in Brussels and Paris, the recovery is likely to take quite a while, up to 24 months, if it follows the same pattern as the aftermath of previous terrorist attacks in Madrid and London. 

“Further economic developments in Europe and the resulting developments in demand in the hotel industry are also likely to be dependent on a possible Brexit. Additional risks that may have a negative effect on travelling continue to be the potential threats of terrorist attacks by IS.”