Pandox, a leading owner of hotel properties in Northern Europe, acquires 18 hotel properties in Germany with a total of 3,415 rooms. Sweden based Pandox currently has a hotel portfolio that comprises 103 hotels with approximately 22,000 hotel rooms across eight countries. The acquisition is expected to be completed by the end of 2015, and is conditional upon having received necessary approvals by German authorities, and the fulfillment of the terms in the share transfer agreement.
The acquisition price, for which bank financing is secured, amounts to MEUR 400, corresponding to approximately MSEK 3,700, on a debt free basis including minority interest. The acquired hotel portfolio is expected to contribute the equivalent of approximately MSEK 150 in cash earnings 2016. The hotels are positioned in the upper mid-market segment with a well-balanced demand mix and are primarily marketed under the brand name Leonardo Hotels. Pandox has signed new 25-year revenue based lease agreements with Fattal Hotels for all of the hotels with good rental guarantee levels. The sellers are the Leopard Group and Fattal Hotels. The acquisition is made together with Eiendomsspar AS as a minority shareholder with 5.1 percent.
“The acquisition fulfils all Pandox’s strategic criteria as regards size, city, location, market position and profitability, and strengthens our position on the important German market. The transaction is also completely in line with Pandox’s business model, which is based on long-term lease agreements. Furthermore, Fattal Hotels is a new strong long-term partner and the hotels have good development potential”, says Anders Nissen, CEO of Pandox.
“My company and I feel privileged that Pandox has decided to make a most significant investment in our hotels and buy 18 hotels in Germany under a lease agreement with Leonardo Hotels. Pandox is a well-known and fast growing hotel company in Europe, and we are honoured and flattered to work together. We look forward to a very close cooperation and hope that we will be able to further expand ourselves for our mutual benefit”, says David Fattal, CEO of Fattal Hotels.
The acquired hotel property portfolio consists of 18 hotels with 3,415 rooms in 12 German cities. The hotels will be marketed under the brand name Leonardo, which means that the hotels currently managed under the brand name Holiday Inn will be converted to Leonardo when the agreements expire. The hotels have either recently been refurbished or are currently under refurbishment. The hotels are positioned in the stable and profitable upper medium class segment in international cities such as Frankfurt, Düsseldorf and Hamburg with a high share of international demand, and regional cities, such as Cologne, Hannover and Mönchengladbach with a high share of regional demand, which in total create a well-balanced demand mix. A majority of the hotels have very strong locations for the business segment and many are located in cities with a dynamic event market for both the business and the leisure segment.
The Fattal Hotel Chain is Israel’s largest hospitality organization with 35 hotels and 7,500 rooms under its management. These hotels are well distributed across the country in all major tourist venues – Tel Aviv, Jerusalem, Tiberias, Dead Sea and Eilat. The Chain owns and manages 60 (including this portfolio) Leonardo-branded hotels in Europe.