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September 2016 Hotel Investor & Operator
September 2016
Hotel Investor & Operator
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“Hotel investor & Operator” since 1998, Algonquin is a private equity investment player which is directly involved with day-to-day hotel management
This specific hotel know-how covers both day-to-day operational matters (such as the set-up of sales and marketing policies, the management of costs, human resources, health & safety regulations, etc.) as well as all real estate matters (in house project management expertise, commercial layout optimization, etc.)
This is the reason why institutional investors, private equity firms and family offices have sought to benefit from Algonquin’s know how as specialised hotel investor and asset manager through the creation of dedicated hotel ventures, in which Algonquin is always an investor, with equity stakes typically ranging from 2% to 50% depending on the size of the assets or portfolios involved
Algonquin’s perimeter : 40 hotels (c. 7,200 rooms), including 17 directly-operated hotels (c. 1,750 rooms).
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1620
2429 33 34
3741 40
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD
Number of hotels
A specialist in hotel investment and hotel management
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Room Split
FRANCE
ITALY
GERMANY
POLAND
UK
BELGIUM
Toulouse
French Riviera
The Alps
Lyon
Paris
Reims
Rome
VeniceMilan
Nuremberg
Warsaw
Valence
KrakowBrussels
Antwerp
Liverpool
Düsseldorf
Offices
London
Boulogne
La Défense
ColombesSaint-Denis
Paris Bercy Disneyland Paris
Belgium9% UK
3%
France59%
Poland8%
Italy14%
Germany7%
Directly operated
by Algonquin
41%
Managed by Intl. Chains
46%
Leased to Intl.
Chains13%
5-star22%
4-star68%
3-star10%
A portfolio of 40 hotels representing 7,200 rooms (Total AUM: €1.5bn)
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Cap d’Ail
Rome
Venice Milan
Brussels
Antwerpen
Nuremberg
Kraków
Warsaw
Paris
Boulogne
La Défense
Colombes Saint-Denis
Paris Bercy
London
Algonquin acts as an active owner and asset
manager by supervising the operating
performances of the operators
Algonquin interacts most notably on revenue
management and cost control optimization as well
as in active real estate asset management (Capex)
Operator's
BrandName Rooms Location Country
Westin Venice 4* 185 Venice Italy
Westin Milan 5* 227 Milan Italy
Sheraton Kraków 5* 232 Kraków Poland
Sheraton Warsaw 5* 350 Warsaw Poland
Sheraton Rome 4* 640 Rome Italy
Hyatt Regency Düsseldorf 5* 303 Düsseldorf Germany
Sofitel la Défense 5* 151 La Défense France
Meridien Nuremberg 5* 192 Nuremberg Germany
Mariott Cap d'Ail 4* 186 Cap d'Ail France
Marriott Renaissance Brussels 4* 262 Brussels Belgium
Marriott Executive Apts Brussels 4* 56 Brussels Belgium
Pullman Paris Bercy 4* 396 Paris France
Radisson Boulogne 4* 170Boulogne
BillancourtFrance
Radisson Blue Antwerp 4* 247 Antwerp Belgium
Courtyard Colombes 4* 150 Colombes France
Courtyard Paris Saint Denis 4* 150 Saint-Denis France
Park Inn Antwerp 4* 59 Antwerp Belgium
Düsseldorf
Offices
17 hotels (3,900 rooms) operated under management contracts Algonquin is an historical partner for international hotel operators
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Nice
Lyon
Paris
Liverpool
London
Brussels
Algonquin has invested in assets leased to large
hotel operators, mainly through variable lease
contracts where value creation is possible through
an active asset management policy between
Algonquin and the lessee
Offices
Lessee's
BrandName Class Rooms Location Country
Radisson Nice 4* 331 Nice France
Radisson Lyon 4* 245 Lyon France
Club Med Tignes 4* 229 Tignes France
Mercure Montmartre 4* 305 Paris France
Mercure Montparnasse 4* 185 Paris France
Novotel Liverpool 4* 209 Liverpool UK
6 hotels (1,500 rooms) operated under lease or management lease agreements
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Reims
Toulouse
Alpes
Valence
Rayol-Canadel
Disneyland Paris
FRANCE
Algonquin’s in house team has been actively operating
many hotels in Paris and France main regional cities
(including ski resorts and Côte d’Azur) for the past 14
years
Algonquin skills encompass marketing, sales, financial
control, real estate project management, IT, web
optimization and revenue management
Franchisor/
Proprietary
Brand
Name Rooms Location Country
Le Morgane 4* 56 Chamonix France
Les Aiglons 4* 107 Chamonix France
Le Golf 3* 246 Les Arcs France
Les Bruyères 4* 95 Les Menuires France
Mercure Les Bossons 4* 89 Chamonix France
Mercure Reims Cathédrale 4* 126 Reims France
Holiday Inn Reims Centre 4* 82 Reims France
Holiday Inn Toulouse Aéroport 4* 150 Toulouse France
Holiday Inn Coquelles 3* 118 Coquelles France
Explorers Hôtel Disneyland Paris 3* 390 Marne la Vallée France
Hôtel le Bailli de Suffren 4* 55 Le Rayol-Canadel France
Hôtel les Terrasses du Bailli 3* 24 Le Rayol-Canadel France
La Résidence du Bailli / 19 Le Rayol-Canadel France
Hôtel Kaya 4* 50 Les 3 Vallées France
Hôtel Atrium 3* 56 Valence France
Appart-Hôtel Hévéa 3* 46 Valence France
Les Chalets de Rosaël 4* 38 Val Thorens France
T
E
M
M
O
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17 directly-operated hotels (1,750 rooms) Through Algonquin’s own brands or internationally renowned franchises
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Sold assets Assets still held by Algonquin Number of hotels owned in said year
Mercure Brigstow Bristol
116 rooms
Ibis York
91 rooms
Courtyard Colombes
150 rooms
Sheraton Krakow (Poland)
232 rooms
Portfolio of 8 hotels
8 hotels & residences / 351 rooms
Novotel Liverpool
209 rooms
Novotel Edinburgh Park
150 rooms
Courtyard Saint Denis
150 rooms
Mercure, ibis and Holiday Inn Reims
3 hotels / 274 rooms
Sale in 2014 of the Holiday Inn Reims, Equity IRR : 41%, and of the Ibis Styles of Reims - Equity IRR: 62%
Explorers Disneyland Paris
390 rooms
Mercure Les Bossons Chamonix
89 rooms
Holiday Inn Toulouse
119 rooms
Sofitel La Défense
150 rooms
The European Hotel Portfolio
8 hotels / 2,308 rooms
Radisson Blu/ Park Inn Antwerp
306 rooms
Portfolio of 3 hotels
3 hotels / 675 rooms
Portfolio of 9 hotels
9 hotels / 1,236 rooms
Sale between 2013 and 2015 of 7 non strategic assets
Portfolio of 3 mountain hotels
3 hotels / 450 rooms (“fonds de commerce” only)
Radisson Boulogne
170 rooms
Sale in 2013 of the Aigle des Neiges Equity IRR: 45%
Sale in 2015 of Hotel Kaya, Bailli de Suffren Resort, Chalets de Rosaël, Apparthotel Hévéa, and Atrium Hotel. Equity multiple: 2,5 times.
Sale in 2015 of the Courtyard Saint-Denis – Equity IRR: 22.5%
Sale in 2015 of the Novotel Edinburgh
Equity IRR: 25%
2 Boutique hotels in Paris
2 hotels / 61 rooms + 5 other Parisian hotels (164 rooms)
Exit in 2015 from a portfolio of 7 Parisian boutique hotels
Equity IRR: 12% over 8 years
Sale in 2014 of the Holiday Inn of Toulouse - Equity IRR: 52%
Sale in 2015 of the Mercure Les Bossons
Sale in 2015 of the Mercure Brigstow
Equity IRR: 48%
Sale in 2016 of the Ibis York
Equity IRR: 33.4%
Hyatt Regency Düsseldorf
303 rooms
Sale in 2015 of the Marriott Renaissance Brussels and the Marriott Executive Apartment Brussels
Sale in 2016 of the Pullman Paris Bercy
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37
34
33
29
24
20
16
12
2016YTD
2015
2014
2013
2012
2011
2010
2009
2008
2007
Algonquin, hotel investor since 1998 75 hotels acquired over the past 17 years and 35 exits
Track record last 10 years:
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• Dedicated teams with offices in 3 countries
• Networks : brokers, operators, administrators, independent owners
• Examples of directly sourced deals over the past years: Mercure Reims Cathédrale (Foncière des Murs / Accor), Holiday Inn Reims (Alliance Hospitality), Ibis Styles Reims (Alliance Hospitality), Mercure Chamonix Les Bossons (Foncière des Murs / Accor), Courtyard Colombes (Host Hotels & Resorts), Sofitel La Défense (Accor)
Sourcing / Analysis / Deal Flow
Structuration of the equity &
bank debt
Active Management
during the Holding period
Exit
• Financial control : reporting, budget, management control, internal audit
• Legal : Legal follow-up
• Technical : investments follow-up, property management, project management in case of renovation, extension and conversion projects
• Platform for day to day operational support : reservations, sales & marketing, IT, media management, etc.
• Management of the relationship with third party operators if any
• Constitution of the required documentation for the exit
• Creation of a favorable context to exit the deal in the best possible conditions.
• Upstream identification of potential buyers
• Depending on Risk Rewards, Algonquin retains a variable minority equity after taking the underwriting
• Small circle of recurring partners
• Establishment of a secure investment framework for the co-shareholders through the implementation of a balanced shareholder agreement: drag / tag / right of veto, etc.
• Strong relationship with numerous banking partners
• Supervision of due diligences and audits, negotiation of legal documentation with the vendors
Value creation within the investment period
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Algonquin partners with a large set of recurring investors (HNWI, Family Offices, Private Equity, Institutional Investors…) which enables it to undertake any kind of operations (Management Contract, Lease, Management Lease, Directly-operated hotels) with different Risk / Reward profiles
A network of long term partners
suited for any operation (size, location,
management type…)
HNWI, Family Offices
Private Equity Institutional
investors
Wide range of lenders implanted
in several European countries to quickly
secure the most suitable financing for our operations
A solid set of lenders and investment partners
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Jean-Philippe Chomette Founder & CEO
Frédéric de Brem Group Managing Director
Algonquin S.A.
Algonquin Management Partners
84%(*)
Financial Department
Vincent Chamley Chief Financial Officer
Acquisition
Department
Stéphane Obadia MD - Head of Acquisition
Real Estate
Department
Charlie Besnier Head of Real Estate
Hotel
Operations
Maxime des Monstiers Chief Operating Officer
Asset
Management
Emmanuel Dissez Head of Asset Management
9 people 6 people 3 people UK/Belgium
/France
2 people
16 General Managers 2 people
A dedicated team of 30 professionals based in London, Paris and Brussels, well balanced between investment specialists and hotel industry professionals
(*) The other 16% are owned by SpaceH, a company held by Algonquin Management Partners’ managers
39%
4%
45%
12%
Shareholder structure Algonquin S.A.as of June 2016
Jean-Philippe Chomette
BNP Paribas Développement
Private Investors
Management
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• 5-star hotel opened in 2004. Outstanding location in Krakow’s prestigious District One (Stare Miasto), on the banks of the river Wisla and overlooking the historic Wawel Castle
• 232 guest rooms, laid out over 7 floors • 1 restaurant, 2 bar, 1 roof-top terrace and 8 meeting rooms (around 500sqm) • gym, indoor pool, club floor with club lounge & souvenir shop • parking: 30 underground spaces and 35 surface spaces
Photos
STRENGTHS • Recently-built asset (2004) with no (or limited) capex requirements • A very distinctive and rare piece of freehold real estate, situated in one of central/eastern
Europe’s most sought after hotel markets (between 1995 and 2012 the Polish economy has shown consistent GDP growth, with an average growth rate for that period of 4.4%)
• Prime location within the city centre of Krakow at a walking distance from all major entertainment facilities and offering splendid views over the Wisla River and Wawel Castle
• Balanced business mix thanks to both corporate and leisure tourism • Limited future supply • Very promising infrastructure developments in the city (airport connectivity and extension,
36,000 sqm convention centre)
WEAKNESSES • Exposure to Polish Zloty exchange rate (to which Algonquin feels reasonably secure) • Complex acquisition of a Swiss holding company
• Asset quality & location • First partnership with Starwood Hotels and Resorts • Strong risk reward profile • 5-year, pre-carried Equity IRR : 18,4% (base case) / 22,4% (best case)
Asset Description
Co-investors Sourcing
• Direct
Strengths & Opportunities, Weaknesses & Threats at acquisition
Deal Motivations & Risk/Reward Profile
Investment figures
in €k
Acquisition Cost 37 200
Stamp duty & Due Diligence Costs 425
Algonquin Acquisition Fees 375
Total Investment 38 000
of which Equity 13 000
of which Debt 25 000
Business Case 1
Acquisition of the Sheraton Krakow (Poland) December 2013
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Asset Description
• 4-star hotel opened in 2006 • Located on the Boulevard Charles de Gaulle in Colombes, Hauts de Seine • 150 guest rooms • 1 restaurant, 1 bar, 2 meeting rooms • Underground parking (50 parking spaces)
Photos
Co-investors Sourcing
• Direct
Strengths & Opportunities, Weaknesses & Threats at acquisition
STRENGTHS • Recent asset (2006) • Attractive location in a developing business park, close to La Défense financial centre, a
major demand generator in the area • Strong basis of loyal & regular corporate clientele • Hotel operated by Marriott Hotels, with whom Algonquin already has a strong relationship
(owner of the Marriott hotel in Cap d’Ail, South of France) • Algonquin already has a solid knowledge of the La Défense hotel market (owner of the
Sofitel La Défense)
WEAKNESSES • Algonquin’s scope of intervention is restricted by the existing management
agreement with Marriott Hotels
Deal Motivations & Risk/Reward Profile
• Asset quality & location • Resilient cash flow and upside potential with regards to the expansion of the neighbouring business park • Quality of Algonquin’s track-record with Marriott Hotels (Marriott Cap d’Ail Monaco / Courtyard Saint-Denis), allowing for more involvement into day-to-day hotel management • Existing management agreement including an owner’s priority return • Strong risk reward profile • 5-year, pre-carried Equity IRR : c. 15% (base case)
Investment figures
in €k
Acquisition Cost 19 000
FF&E Reserve buy-out 400
Stamp duty & Due Diligence Costs 1 310
Algonquin Acquisition Fees 190
Total Investment 20 900
of which Equity 6 800
of which Debt 14 100
Business Case 2
Acquisition of the Courtyard Colombes (France) October 2013
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Asset Description
Park Inn • 3-star hotel opened in 2008 • 59 guest rooms over 8 floors • 1 F&B outlet (breakfast only)
Photos
Co-investors Sourcing
• JLL
Strengths & Opportunities, Weaknesses & Threats at acquisition
STRENGTHS • Recently built assets (1997 for the Radisson Blu, and 2008 for the Park Inn) • Prime location in one of the most dynamic employment area in Europe thanks to its world-
class sea port, petrochemical cluster and diamond industry • Promising infrastructure development such as the 25,000m² convention center next door
due to open in 2016 • Dynamic city with both leisure and corporate demand, from both domestic and
international sources • Limited branded supply, all the more with the recent closure of the 174 rooms of the
Radisson Park Lane and no further hotel development projects in the city • Repositioning opportunity through an important capex program at the Radisson Blu
WEAKNESSES • Though a number of projects will soon revitalize the Central Station environment,
the area currently lacks coherence
Deal Motivations & Risk/Reward Profile
• Asset quality & location • Capitalizing on long time relationship between Algonquin and Rezidor • Risk Reward: high • Value creation through:
• Creation of a retail center from an outdated existing aquarium • Increase of the operational performance thanks to a comprehensive refurbishment program
Main Investment figures
Radisson Blu • 4-star hotel built in 1997 • 247 guest rooms over 6 floors • 1 restaurant, 1 breakfast area, 1 bar, 18
meeting rooms (1,900m²) • Fitness, pool and Aquatopia aquarium • Underground parking (107 parking spaces)
Two 3 and 4-star hotels located on one side of the historical Antwerp Central station and 500m away from the historical city center.
10%
90%
Algonquin
KKR
Financing Debt
in €k
Enterprise Value ~50 000
Extensive Refurb. Program ~7 000
Total Cost ~57 000
Business Case 3
Acquisition of a 306 rooms Rezidor portfolio in Antwerp (Belgium) June 2015
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Asset Description
Portfolio of eight 4 to 5-star hotels located around Europe:
Photos
Co-investors Sourcing
• Eastdil Secured
Strengths & Opportunities, Weaknesses & Threats at acquisition
STRENGTHS • Mostly central locations in primary European cities • Large assets with strong bottom line • Good growth fundamentals as the portfolio is well positioned to capitalise on the
anticipated European economic recovery • Value add opportunities through re-branding and re-positioning of some of the hotels.
WEAKNESSES • Asset management intensive
Deal Motivations & Risk/Reward Profile
• Quality assets in prime locations across several primary European cities, excellent exposure • Complicated acquisition process and asset management, limiting the number of competing bidders • Hotels managed by trusted operators of Starwood, Marriott, and Accor • Performance still below the 2007 peak, seems to have already reached the trough • Value creation through:
• Intensive Asset Management • Capex programs
Investment figures
• 4-star Pullman Paris Bercy with 396 rooms
• 4-star Sheraton Rome with 640 rooms • 4-star Marriott Renaissance Brussels
with 262 rooms • 4-star Marriott Executive Appts with 56
rooms
• 5-star Westin Milan with 227 rooms • 5-star Meridien Nuremberg with 192
rooms • 5-star Sheraton Warsaw with 350
rooms • 5-star Westin Venice with 185 rooms
5%
47.5%
47.5%
Algonquin
Benson Elliot
Walton Street
Financing Debt
in €k
Enterprise Value >400 000
Extensive Refurb. Program ~50 000
Total Cost >450 000
Business Case 4
Acquisition of the European Hotel Portfolio (Europe) October 2015
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Business Case 5
Acquisition of the Hyatt Regency Düsseldorf (Germany) July 2016
Asset Description Photos
Co-investors Sourcing
• Direct
Strengths & Opportunities, Weaknesses & Threats at acquisition
STRENGTHS • The Quality of the asset which is a an iconic building in Dusseldorf - Trophy Asset • Located in a Prime location for both leisure and business tourists • A Good hotel market well balanced between leisure and business demand. Market is
becoming less reliant on the Messe with corporate demand increasing on the central location benefiting to the hotel. Ranked 3rd on TripAdvisor
• Tax Benefits : Share deal featuring a low stamp duty, book value of the asset at €109m and a very low level of corporate tax over the investment
THREATS • European terrorist threat
Deal Motivations & Risk/Reward Profile
• Quality of the asset / location • Acquisition NOI Yield: 5.2%
Main Investment figures
• New purpose built hotel opened in 2012 • 303 rooms: 242 standard (32sq. m.), 61 suite ( from 37 to 158 sq. m.) • 2 restaurants (152 + 62 covers). 2 bars (144 + 44 covers), 1 private bar with 20 covers • 10 meeting rooms covering 908 sq. m. for 780 delegates • “Regency Club” on 18th floor with extra amenities for business guests • 485sqm spa, includes 5 treatment rooms, sauna and gym • 80 parking spaces
2%
98%
Algonquin
Aviva
in €k
Acquisition price 109.000
Acquisition costs 1.500
Acquisition fees Algonquin 708
Total Investment 111.208
Equity 37.365
Obligations (Shareholders) 73.842
