JER Partners, the US private equity firm focused on property, has bought a half-share in Geneva's Manotel chain.
The transaction values the six four-star hotels, with a total of 610 rooms, at in excess of CHF200m ($167m). But more importantly signals a sign of life in the stagnant Swiss hotel market.
JER is buying its stake off Finial Holding which is retaining a half-share in joint venture arrangement going forward. The private investment company Finial started repositioning Manotel in 2001 and has spent CHF75m bringing the properties up to scratch, a marked contrast to the bulk of the Swiss hotel stock which has been severely underinvested.
The JER investment also provides Manotel with the resources to grow and it is looking at spending up to CHF175m on doubling in size, adding properties of between 50 to 150 rooms in Swiss cities such as Zurich, Basel and Lucerne over the next three years.
Again, the healthy capital resources of Manotel brings into sharp relief the under capitalised competitor properties in Switzerland. The bulk of the country's hotels are over-borrowed with little or no access to capital to fund reinvestment.
Malcom Le May, president, JER Europe, said: \Manotel is successful because it offers a high-end experience at affordable prices. We believe that it is an extremely valuable proposition which can be developed into a national chain in Switzerland\.
Omar Danial, president of Finial, said: \This investment by JER will provide financial expertise and capital to fund our proposed expansion.\ The deal is expected to complete by January.
JER manages six private equity real estate funds of which three are focused exclusively on Europe. Among its hotel investments are the Courtyard by Marriott at Neuilly-sur-Seine in Paris and the Great Eastern Hotel in London.