CapMan has invested a huge chunk of its new CapMan Hotels RE Ky fund via the acquisition of a Finnish hotel portfolio from London and Amsterdam-listed Northern European Properties.
Helsinki-based CapMan signed a deal today to pay €805 million for 39 hotels, all except one of which is in Finland. The odd one out is the Holiday Club Åre in Sweden.
The properties are managed by an array of operators who have been paying rent to Northern European Properties, a property investment venture set up by London entrepreneurs Ian and Richard Livingstone.
The deal means that its new hotel vehicle has got off to a flying start. The €835 million fund has been set up to become a leading player in the Nordic hotel investment market. Management has committed €5 million to the vehicle.
It is the fund sponsor’s third real estate fund to date, the first being CapMan Real Estate I established in 2005 and the second being CapMan RE II in 2006. Commitments in the three funds total €1.9 billion overall.
“The establishment of the hotel real estate fund is an indication of the wide growth opportunities in Nordic real estate investment,” said Heikki Westerlund, chief executive officer of CapMan Plc.
Markku Hietala, head of CapMan Real Estate, added: “The acquired portfolio offers a good diversification and has substantial earnings potential through rental income, development projects and property value appreciation.”
The fund will begin to generate carry when investors have regained their investment and a preferred annual return of 8 percent after which the division of cash flows will be 80 percent for investors and 20 percent for the management company. After the annual return to investors has exceeded 10 percent, the division of the fund's cash flows will be 70 percent for investors and 30 percent for the management company.
The establishment and acquisition of the fund marks a double for the firm in hotel investment. It has also signed a letter of intent with Holiday Club Resorts Oy for the development of four spa hotel projects in the Nordic countries in the coming years. The planned resorts are located at Himos and Saimaa in Finland and Västervik and Öresund in Sweden.