Principal Real Estate Europe exchanges contracts for the sale of 11 hotels to AXA IM – Real Assets


Principal Real Estate Europe (Principal) has exchanged contracts for the sale million of its remaining portfolio of 11 hotels in its Principal Hotel Immobilien Spezial Fonds (The Fund) to AXA Investment Managers – Real Assets (AXA IM – Real Assets) for EUR545 million.

The portfolio comprises over 2,300 rooms in seven hotels in Germany and four hotels in other European cities. AXA IM – Real Assets acquired the portfolio on behalf of its clients in an off-market transaction. The closing of the transaction is expected during the Q4 2019.

The transaction will conclude the disposal of Principal Europe’s entire hotel real estate fund. The fund first closed in 2012 and acquired 16 hotels until 2016. The portfolio sale to AXA IM – Real Assets signals the end of the Fund’s investment cycle. Since 2012, the Fund exceeded annual distribution targets and was supported throughout its lifecycle by various value enhancing asset management initiatives such as limited refurbishments and lease extensions which together with good hotel market and asset selection as well as attractive financing conditions throughout the investment period allowed to achieve excellent returns.

Jochen Schafer-Suren, CEO of Principal’s Hotel and Leisure Division, comments: “At Principal we are proud of the results of our first ever hotel fund product which with this transaction will come to its successful conclusion as we will unwind the fund in early 2020 and return capital and profits to our institutional investors. It highlights the expertise of our strong team of seven dedicated hotel real estate specialists to develop well designed hotel real estate investment strategies, select attractive hotel markets and assets, execute effectively acquisitions, financings, and asset management initiatives all the way to managing eventual disposals strategies.

“After this very successful first Principal hotel fund we will focus on investing over EUR400 million of capital available for new hotel investments of our existing second hotel fund focused on value-add hotel investments across Europe. Furthermore, we will leverage our expertise in hotel real estate which attracts more and more investors due to its attractive long-term income generation by developing new well-designed hotel real estate investment strategies in Europe and the US as markets mature and evolve to serve investors in delivering attractive returns with institutional type-high quality hotel assets and risk return profiles”.

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