GE Real Estate Joins BNP Paribas to Grow $1.5B French Hotel Fund
- May 29, 2008
GE Real Estate Europe has jumped aboard the Capital France Hotel fund, joining BNP Paribas Assurance as a founding limited partner. The two companies intend to grow CFH’s assets under management to $1.5 billion by the end of 2010 by investing in hotels across the Euro zone, Scandinavia and Central and Eastern Europe. Capital France Hotel is managed by Algonquin Asset Management France. It currently owns and manages a portfolio of nine three- and four-start hotels in urban locations under Rezidor brands The fund plans to focus on mature markets, especially Germany, France and Space, but will also keep a vigilant eye on Eastern European countries. Radisson and Park Inn. Additionally, GE Real Estate has purchased three French assets, operated by Accor and Marriot, into the fund, in exchange for CFH shares and cash. Algonquin Asset Management France holds a stake in the fund, thereby aligning its interests with those of the other investors. GE Real Estate will act as both an investor in the fund through its initial stake and as an operation partner. GE Real Estate Europe was attracted to the fund due to CFH’s strike zone of the mid- and upscale segment, which covers the bulk of the European market, Remy Gancel, managing director & head of new business for GE Real Estate Europe, told CPN. “They are a good compromise between the budget segment, which is the most operationally driven, and the luxury segment, which is the most speculative segment.” Gancel noted that CFH is an almost unique investment vehicle, as it combines strong hotel expertise with its shareholders’ financial strength, and there are very few hotel investment managers with strong industry expertise focused on the European markets. “We believe that the partners share a common vision and timing for growth across the continent,” he said. CFH’s portfolio is valued at approximately $425.5 million, comprised of 12 assets in France that total 2,140 rooms. They are: two hotels in Paris operated by Accord under the Mercure brand; one hotel in Cap d’Ail operated under the Marriott brand; and current portfolio of nine hotels, which are located in regional French cities, and include the Radisson Nice, the Radisson Lyon and the Park Inn Nancy. The fund plans to focus on mature markets, especially Germany, France and Space, but will also keep a vigilant eye on Eastern European countries. Paris, in particular, is considered a strong buy for investors this year, with low risk and high returns, according to a Jones Lang LaSalle Hotel’s “Hotel Investment Outlook” report released earlier this year. Other strong markets for hotel investment include Berlin, Copenhagen, London, Moscow, Munich, St. Petersburg, Stockholm and Warsaw. Last month, Strategic Capital Solutions L.L.C. created a $300 million hotel investment program to target properties all over the world, but with a particular emphasis on the United Kingdom, Spain, France and Italy.