Building a global hotel portfolio 2009-2010
Hotels have been part of the Union Investment portfolio for over 40 years. A strong focus on developing our expertise in this sector has made them an important revenue driver for Union Investment’s open-ended real estate funds, rather than merely an exotic addition. Proactive deal structuring in conjunction with strategic partners was key to the international expansion of our hotel activities that commenced in 2001.
“Union Investment has been active in the hotel sector since 1971. Since the early 2000s, we have steadily boosted our hotel expertise by partnering with experienced project developers and hotel operators,” explains Andreas Löcher, head of Investment Management Hotels. “Development projects in particular require clearly structured processes, proven teams and reliable partners.”
In an increasingly competitive market environment, Union Investment and its strategic partners engage in proactive deal structuring, which includes implementing complex contract structures. Union Investment has built strong relationships with fast-growing hotel operators such as Meliá. In 2013, for example, Union Investment acquired the Meliá Düsseldorf, a premium four-star hotel, for its UniImmo: Deutschland fund. In the La Défense district of Paris, Union Investment is currently realising a 369-room flagship Meliá hotel for the Spanish chain in association with Vinci. Other long-standing partners with extensive market experience include UBM Realitätenentwicklung (since 2009), with whom Union Investment has worked successfully on numerous occasions including hotel projects for various brands in Amsterdam (Crowne Plaza), Munich (Angelo Hotel), Frankfurt (Holiday Inn Alte Oper), Munich and Berlin (both Holiday Inn Express). Austrian real estate developer UBM is responsible for construction and operation of the hotels under a sale and leaseback structure. As such, UBM often has a direct contractual relationship with an international management Company.
Union Investment focuses on core European markets and the US when realising hotel projects, which are all let on long leases to strong operators. It invests primarily in prime locations in major business centres or in attractive secondary cities with excellent micro-locations. 2016 saw the move into the American market. An agreement was signed for the first hotel investment, in the east coast city of Boston, with the acquisition of a 242-room hotel belonging to The Godfrey boutique hotel brand, which operates in the upper price segment. The Godfrey Boston is let on a 25-year lease covering 100 per cent of the total rental area of 135,000 square feet. Further hotel acquisitions followed, in the shape of the LondonHouse in Chicago and Courtyard by Marriott World Trade Center in New York.
“The international growth of our hotel investment activities is based on a clear strategy of expanding our hotel portfolio and diversifying even further across all usage classes,” said Andreas Löcher, head of Investment Management Hotels at Union Investment Real Estate GmbH, Hamburg. “Our long-standing presence in the US office market and our strong exposure both in metropolitan areas and in gateway cities is successfully opening doors and enabling us to tap into attractive hotel markets in North America.”