German investors break U.S. city hotel purchase records

(11 Howard)

Last year, Germany's hotel investment market reached an all-time high, with transaction volume at just under €4.5 billion by the end of 2015. In its Germany Market Report, Colliers calculated that German investors poured almost €2.3 billion into hotel assets in the country over the course of 12 months. 

But Colliers also said that it did not to see the same kind of growth in 2016. Instead, the report predicted that Germany's hotel investment numbers should remain steady this year. 

As such, it makes sense that German investors are looking west for new opportunities. And they're finding them: Just months after Boston saw one of its largest-ever hotel transactions, the same team struck magic again, setting new precedents for what one of Europe's strongest economies can do for America's hotel scene. 

In Chicago, the boutique LondonHouse hotel was sold to a German investor for a record price in the city. Hamburg-based investment manager Union Investment Real Estate purchased the 452-room hotel for $315 million from Oxford Capital Group and Angelo, Gordon. At $697,000 per room, it is the highest per-room price ever paid for a Chicago hotel, topping the $592,000 per room price tag for the Waldorf Astoria last July.

Oxford has arranged a 25-year contract to lease back the 361,467-square-foot property and manage the hotel, which is set to open in May.

With the LondonHouse Chicago agreement, Union Investment is expanding its UniImmo: Europa open-ended real estate fund in the United States. "This second investment underscores our reputation as a reliable and attractive partner to the hotel industry at international level. It also opens up the prospect of further off-market transactions in the US," Andreas Löcher, head of Investment Management Hotels at Union Investment Real Estate, said in a statement. 

The deal follows Union Investment's joint deals in London and in Boston, which marked the company's entrance into the U.S. late last year. In December, Oxford sold the Godfrey Hotel in Boston’s Downtown Crossing to Union Investment for a total of $173.9 million. 

Meanwhile, Commerz Real's open-ended REIT HausInvest has acquired the 221-room 11 Howard Hotel in New York City's SoHo neighborhood, which just opened at the beginning of the month. The seller was Soho Hotel Owner, part of RFR Holding USA, and the hotel will be affiliated with Starwood Hotels and Resorts under its new Design Hotels brand. The purchase price was not disclosed. 

Photo courtesy obs / Commerz Real AG / Ivor Ip