Pramerica Real Estate Investors and Paris Inn Group announce that they have formed a new joint venture company to invest in Paris hotels and that they have acquired the JV's two first hotels for more than 30 million.
The new Luxembourg-based JV, Capital Inn S.à.r.l., has a total investment capacity of around 60 million. Pramerica is the European arm of the real estate investment and management business of Prudential Financial, Inc. (NYSE:PRU), which is headquartered in the United States.
The Paris hotel sector offers strong fundamentals and good potential to grow values. Recognising the widening gap between a supply-constrained, ageing hotel stock and clients' increasing desire for higher-end products, the JV will target central and western Paris hotels that have the potential to meet this growing demand.
The value creation strategy for each hotel involves improving operating performance through Paris Inn Group's asset management expertise, coupled with selected refurbishment, which, in some cases, will lead to an upgrade in the hotel's star rating. The initial portfolio includes two three-star and four-star hotels located in Paris and comprising more than 150 rooms.
Pramerica's London-based Merchant Banking Group structured the investment on behalf of institutional investors in its PRECO IV fund.
"Due to consumer demand for modern product outstripping supply at present, the Paris hotel sector is one that we have identified as offering strong value potential. I am very pleased to be working on this investment with the well regarded and experienced teams of Paris Inn Group," said Philip Barrett, Managing Director of Pramerica.
"We have a proven track record of investing successfully through JVs with local specialists across Europe. I am confident that this venture will be another excellent example of how this strategy can be applied to generate risk adjusted returns for our investors."
Paris Inn Group is an asset manager and investment advisor specializing in the independent hotel sector. Well established in Paris since 1923, as at November 1, 2011 the Paris Inn Group managed 23 three- or four-stars hotels through its commercial brand Book Inn France.
Jean Bernard Falco, President of Paris Inn Group, added: "It is an honor for Paris Inn Group to be associated to the reputation, expertise and financial strength of Pramerica. Thanks to our respective knowledge and experience, this association will help us complete several high potential hotel projects linked to the dynamism of the greater Paris and generate value for our investors."
Source: FTI Consulting