Hotel owners, rather than operators, look set to become the dominant accommodation plays on Europe’s stock exchanges over the next few years.
The latest example of the swelling ranks of listed owners was Northern European Properties, a vehicle brought to market by London & Regional Properties last week.
While NEPL is not a dedicated hotel owner, hotels are a core part of its 84-strong portfolio which encompasses holdings in Scandinavia and the Baltics.
The growth story told to investors on its flotation on London’s Alternative Investment Market was one of looking East, particularly into Russia and further into the Baltics.
The company raised Eu162m and currently has a market cap of £473m. The portfolio is valued at Eu1.86bn, spread across Sweden, Finland, Denmark and Lithuania. NEPL believes it can invest Eu750m in acquisitions over the next 12 to 18 months, focusing on established properties with income streams rather than development.
Chairman is Jens Engwall, the former CEO of Swedish property company Kungsleden. Also joining the board as non-executives are: Michael Hirst, the former head of Hilton International; Kari Osterlund, the chairman of Holiday Club in Finland and an adviser to private equity outfit CapMan; Christopher Lovell, a former partner in law firm Theodore Goddard; Martin Sabey, currently a director in a number of investment firms and formerly a partner at Ernst & Young; and Ian Livingston, managing director of London & Regional Properties.
The management team is LR Real Estate Management, led by Thomas Lindeborg, L&R’s CEO of its Nordic operations.
L&R has retained a 38% holding in the new company with the Livingstones realising £117m as part of the float
L&R has also been active much further south on the globe, joining forces with Dubai property developer Nakheel, sister company to Istihmar, to invest $1bn in the waterfront at Cape Town, adding resort hotels and retail to the existing Victoria & Alfred Waterfront. L&R bought the facility last year with Istihmar.
Such moves as the L&R listing come ahead of impending real estate investment trust legislation next year in both the UK and Germany that is expected to see a number of hotel specific REITs created.
In France, REIT legislation in the form of SIIC has already seen the creation of Fonciere des Murs, the biggest listed dedicated hotel owner in Europe.
Last week Hotel Analyst was in Helsinki, attending HOFTEL’s (Hotel Owners, Franchisees Transatlantic and European League) annual conference.
Among the many hotel owners present, including London & Regional, was the Oslo-listed Norgani, the biggest owner in the Nordic region with a market share of 5.4%.
Its upbeat take on the future focused around a strengthening revpar in the region (Norway is up 8.1% and Sweden 5.7% for the year to the end of September) which was significantly boosting performance at its 79 hotels.
The future is one of active asset trading, rather than one of buy and hold. “We have to show the market we can generate profits and show that the value in the books can be realised,” said Henrik Molin, an asset manager at Norgani.
According to Molin, it was by sitting on their hands that previous hotel owners such as Pandox have ended up being delisted as investors lost faith in the business story due to the lack of supporting evidence.