CPA®:18 – Global, a non-traded REIT managed by W.P. Carey, has completed a sale-leaseback transaction to purchase a majority stake in the Wyndham Stuttgart Airport Messe hotel for approximately €30.8m. The hotel operating company has entered into a 20-year net lease for the property.
The hotel, which was originally built in 1987, underwent an extensive renovation that began in 2012 and included all the rooms and common areas, such as the lobby, restaurant and bar. The façade was also updated in 2015, and a modern conference facility is expected to be added this year.
The property is built on one of only two land parcels allotted for hotel operations at Stuttgart Airport. Its location is adjacent to the passenger terminal at the airport, the sixth busiest in Germany with 10 million passengers per year. Additionally, the Stuttgart Messe, Germany’s ninth largest trade centre, relocated next to the hotel in 2007 and continues to positively impact hotel occupancy. Ernst & Young’s new German headquarters is also adjacent to the hotel and is expected to open this year.
Grand City Hotels, one of the largest German hotel operators, will continue to manage the hotel. It currently holds an AAA rating from German hotel specialist Treugast and manages more than 120 hotels and 15,500 rooms with more than three million guests each year. The 20-year net lease with the hotel operating company is fully guaranteed by its parent company and includes fixed annual rent escalations.
Arvi Luoma, executive director at W. P. Carey, commented: "This transaction offered the opportunity for CPA®:18 – Global to invest in a uniquely positioned hospitality asset in one of Europe’s leading industrial and business cities. It also increased the number of German hotel assets in the portfolio, further demonstrating our strength in Central Europe and our ability to deliver tailored real estate financing solutions in this sector. This also marks our second transaction with companies led by Liran Wizman co-founder of Grand City Hotels and of Europe Hotels Private Collection. We view this as a testament to both the value of our long-term business relationships, as well as our reputation for efficiently structuring and successfully closing transactions."
Liran Wizman, co-founder of Grand City Hotels and of Europe Hotels Private Collection, noted: "W. P. Carey’s global investing perspective and experience made them the ideal partner for us in this deal. Their long-term investment philosophy and track record of closing similar transactions in the hotel sector was invaluable in enabling us to finalize the deal, which is our second together in Germany.”
The city of Stuttgart is one of the most important economic and business centres in Germany, attracting major firms, such as Bosch, Mercedes, Porsche, Lenovo and Siemens. In 2014, Stuttgart posted new records for both the number of guests and the number of overnight hotel stays, which created an attractive supply and demand imbalance for hotel operators.
