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CPA:18 – Global Funds $29 Million Hotel Build

CPA:18 – Global, a publicly registered non-traded REIT sponsored by W. P. Carey (NYSE: WPC), has entered into an agreement to fund the development of a new hotel in Hamburg, Germany. The developer of the project is Pino Sergio. CPA:18 – Global will provide approximately $29 million (€25 million) for the construction of the property, which will be leased to the German affiliate of Melia Hotels International, S. A. (Melia) for a period of 25 years upon completion.

Arvi Luoma, executive director of W. P. Carey, says that the transaction was an opportunity to secure a high quality hotel property in Germany’s second largest city at attractive pricing. The deal structure, he adds, “highlights our ability to evaluate build-to-suit opportunities and invest in well-positioned areas undergoing value-enhancing development. This transaction is our second hotel investment in Europe in 2015 and we are delighted to add a recognized global brand with strong financial standing to CPA:18 – Global’s growing list of tenants.” CPA:18 – Global’s recently revealed construction, funding and acquisition of an $85 million (€76 million) hotel in Munich, Germany.

Upon completion, which is expected during summer 2017, the hotel will be operated under the INNSIDE by Melia flag, a leading European hotel brand with 14 locations across Germany and Spain. The INNSIDE by Melia hotel in Hamburg will consist of approximately 207 rooms. Amenities will include conference space, a bar, restaurant and fitness center, underground parking and a boat dock on the adjacent canal.

Gabriel Escarrer, CEO of Melia Hotels International S. A., explains that “W. P. Carey’s global investing perspective and experience, particularly in Germany, was invaluable in our decision to partner with them on this transaction. Their ability to deliver on the required structure, along with their long-term investment philosophy, made them the ideal partner for us. We look forward to opening this hotel in 2017 and working with W. P. Carey over the length of the lease.”

The hotel will be situated on the edge of the HafenCity district adjacent to the route 4 thoroughfare and in close proximity to the city’s central train station. HafenCity, formerly a port area, is an urban regeneration district that includes ten neighborhoods covering 388 acres. The area features a variety of residential buildings and offices, as well as leisure, retail and cultural facilities, and was connected to Hamburg’s subway line in 2012. According to a prepared release, it is anticipated that when the redevelopment of HafenCity is completed during the next decade, it will be home to approximately 12,000 residents and 45,000 employees.

Hotel room supply in Hamburg has grown at a cumulative average growth rate of 3.2 percent since 2010, while demand has increased 5.8 percent during the same period, the release says.

The hotel operator, Melia, is Europe’s third largest hotel group by room count, the release says. The company has a well-diversified global portfolio, operating more than 350 hotels in the midscale to premium segment in 30 nations and across four continents.

Earlier this month, CPA: 18 – Global purchased a $17 million warehouse and distribution facility in Plymouth, MN, which you can read about here.