Fattal sells 18 hotels in Germany for €400m

David Fattal

Fattal is selling the Leonardo brand hotels to Swedish company Pandox and will lease them back.

Fattal Hotels, owned by David Fattal, together with its British partner Leopard Group, has signed a deal for the sale of 18 hotels in Germany, with a total of 3,415 rooms, to Swedish hotel chain Pandox AB for €400 million (NIS 1.7 billion).

The hotels in question are 18 of the 20 Holiday Inn hotels that Fattal bought together with partners in 2013 for NIS 1.2 billion. The deal gives Fattal Hotels a 322% return on equity.

The deal is a sale and lease-back arrangement. Fattal Hotels remains as a long-term lessee in all of the hotel properties with new 25-year revenue-based lease agreements with rental guarantees. Fattal Hotels will manage the hotels under the Leonardo brand.

The lease payments are estimated at €22.5 million a year, plus a variable element in accordance with sales turnover.

The hotels are of four-star standard and are situated in strategic locations such as city centers, airports, and conference centers, in twelve major cities in Germany where there is both domestic and international demand. Among the locations are Cologne, Hamburg, Frankfurt, Mannheim, Hanover, and Baden-Baden. The deal is due to be closed by the end of this year.

“My company and I feel privileged that Pandox has decided to make a most significant investment in our hotels and buy 18 hotels in Germany under a lease agreement with Leonardo Hotels. Pandox is a well-known and fast growing hotel company in Europe, and we are honored and flattered to work together. We look forward to a very close cooperation and hope that we will be able to further expand ourselves for our mutual benefit”, says David Fattal.

Talking to "Globes", Fattal explained that the decision to sell 18 of the Fattal chains 50 hotels in Germany and to lease them back arose from the fact that Fattal Hotels has a large number of hotels under ownership rather than leased, by comparison with other hotel chains in Europe. "We intend to continue making investments with the aim of expanding the Leonardo brand to other European countries," Fattal added. He explained that the company was selling 18 of the 20 hotels it bought from Holiday Inn because the two remaining hotels, in Berlin and Munich, were not owned by Fattal, which leases them.

The Fattal group is 82% owned by David Fattal and 18% owned by Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL). Fattal currently has 17.5 thousand hotel rooms in 95 hotels in Israel and overseas. The chain first became active in Europe in 2006. Fattal now has 60 hotels in Europe with an annual turnover of €320 million.

Swedish public company Pandox has 22 thousand hotel rooms in 103 hotels in eight European countries.

Published by Globes [online], Israel business news - www.globes-online.com - on December 6, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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