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Insight Comment |
L+R Hotels is joining forces with Dutch pension fund manager PGGM to back a new venture aiming to buy up hotels in key European cities.
The pair are putting in around €500 million of equity with another €500 million of debt.
Transactions will be carried out by a new hotel asset management company, LRO Hospitality, set up by L+R Hotels and John Ozinga, former CEO of AccorInvest.
The team is led by CEO Ozinga and with Henri Wilmes serving as chief investment officer. Wilmes joined from A&O Hostels, having previously been at L+R Hotels for six years in the mid 2010s.
The geographical focus for the firm will be western European city markets in France, Germany, Benelux, Spain and Italy.
How It All Came About
L+R Hotels started thinking about a new venture back at the latter half of 2020, a time before a Covid-19 vaccine was widely available and as with the pandemic still raging.
The firm found a likeminded individual in Ozinga, who had plenty of experience in continental Europe, thanks to a long career in the industry. He was most recently CEO of the former Accor real estate division AccorInvest.
PGGM, a Dutch not-for-profit cooperative pension fund service provider, was described as a “natural fit” to come on board as a partner.
A pipeline of target properties is well advanced and the first two deals are set to be announced in February.
Stress Not Distress
Speaking with Hospitality Insights, Desmond Taljaard, managing director of L+R Hotels, said the situation was different to the one after the global financial crisis in 2007/08.
“We don’t think there’s going to be catastrophic failure, but we do think there’s going to be stressed situations where some investors may be leaving the industry or reducing their exposure to the industry and we’re long term committed and fans of the sector,” he said.
The difficulty is that even though some investors may have been generating little in terms of rental returns over the last couple of years, it isn’t easy to redeploy the funds in the current market.
L+R Hotels’ strategy is to have plenty of skin in the game. In a portfolio of more than 100 hotels, it operates around 90% directly.
“We will have brands or franchises where necessary, but we’d much rather control as much of the P&L account, revenue management, cost conversion [as possible] than particularly leave it in the hands of 3rd party managers,” Taljaard said.