W. P. Carey, a global net lease REIT specializing in corporate sale-leaseback, announced that CPA:18 – Global, a non-traded REIT, has entered into an agreement to fund the development of a new 207-room hotel in Hamburg, Germany.
CPA:18 – Global will provide approximately $29 million for the construction of the property, which will be leased to the German affiliate of Melia Hotels International for a period of 25 years upon completion.
This transaction follows CPA:18 – Global's recently announced construction, funding and acquisition of an $85 million hotel in Munich, Germany.
Upon completion, which is expected in summer 2017, the hotel will be operated under the INNSIDE by Melia flag, a European hotel brand with 14 locations across Germany and Spain. The INNSIDE by Melia hotel in Hamburg will consist of approximately 207 rooms.
The hotel will be situated on the edge of the HafenCity district adjacent to the route 4 thoroughfare and in close proximity to the city's central train station.
Hamburg is Germany's second largest city. Hotel room supply in Hamburg has grown at a cumulative average growth rate of 3.2 percent since 2010, while demand has increased 5.8 percent during the same period.
Melia is Europe's third largest hotel group by room count. The company has a well-diversified global portfolio, operating more than 350 hotels in the midscale to premium segment in 30 nations and across four continents.
The developer on this project is Pino Sergio, who has approximately 24 years of experience in real estate management and development. The general contractor on the project is the Dutch Ten Brinke group.
Arvi Luoma, Executive Director of W. P. Carey, commented: "This transaction represented an opportunity for CPA:18 – Global to secure a high quality hotel property in Germany's second largest city at attractive pricing. The deal structure highlights our ability to evaluate build-to-suit opportunities and invest in well-positioned areas undergoing value-enhancing development. This transaction is our second hotel investment in Europe in 2015 and we are delighted to add a recognized global brand with strong financial standing to CPA®:18 – Global's growing list of tenants."
Gabriel Escarrer, CEO of Melia Hotels International S. A., noted: "W. P. Carey's global investing perspective and experience, particularly in Germany, was invaluable in our decision to partner with them on this transaction. Their ability to deliver on the required structure, along with their long-term investment philosophy, made them the ideal partner for us. We look forward to opening this hotel in 2017 and working with W. P. Carey over the length of the lease."
Pino Sergio as the developer of this project, noted: "W. P. Carey's CPA:18 – Global is an investor focused on long-term investments. The negotiations with this investor were on a very high level and we are glad CPA:18 – Global decided to invest in the Hamburg location, as well as in the brand Innside operated by Melia, which is a strong growing hotel company in the robust market for business hotels."