The Hilton Prague has been sold to the Irish based Quinn Group by Jones Lang LaSalle Hotels, acting on behalf of Highridge, a privately-owned real estate investment company and DB Real Estate Global Opportunities Fund IA, a fund managed by Deutsche Bank`s Real Estate Opportunities Group. The hotel, which opened in 1991, will continue to be managed by Hilton, who has operated the 5-star hotel and conference centre since 1996. The sale also includes the 226-room Ibis Karlin Hotel.
Nick Marsh, CEO Europe, Jones Lang LaSalle Hotels, said: “I am delighted that we have been able to conclude a transaction of this magnitude and complexity in such a short period of time. Our clients have made an impressive return on their investment, but there remains great upside potential for the Quinn Group.”
Robert Seabrook, Executive Vice President, Jones Lang LaSalle Hotels, added, “Prague is probably the most attractive hotel market in Central and Eastern Europe with hotel investment values in the city expected to show significant improvement following the Czech Republic`s accession to the EU. As a result, we saw a significant amount of interest in this opportunity from a variety of European and International investors.”
The 788-room Hilton Prague has consistently delivered a strong operating performance, thanks to its 4,000 sq. m. of state of the art conference and meeting space. The ground floor of the hotel was badly damaged in the floods of August 2002, but it re-opened in late September - in time for the NATO summit in November of that year.
The recently completed ballroom and the fully renovated and extended leisure centre will enhance future trading at the hotel. The EU accession of the Czech Republic in May 2004, which will significantly further the country`s economic and political integration into the wider European economy, should further assist the hotel`s performance.
“Jones Lang LaSalle Hotels have been involved with the two properties since they were purchased by Highridge five years ago. Our asset management services have added significant value through assisting the owners in strategic initiatives, including the refinancing of the original Czech State debt, improving operational contracts, creating the new ballroom and health club/spa, and negotiating the insurance claims which resulted from the flooding in 2002,” says David Bridge, Executive Vice President, Jones Lang LaSalle Hotels.
Prague`s trading performance in recent months has been strong and this is expected to continue into 2004 and beyond. There is limited projected supply in the medium term, which makes the market attractive to investors looking to benefit from the expected upswing that will occur when the Czech Republic joins the EU next year.
With the exception of Prague, investor sentiment remains subdued for Central European markets, many of which are plagued by over supply. Prague`s strategic positioning on the new Eastern European Union frontier offers attractive long-term opportunities for those investors willing to accept greater risk, in return for higher returns in the short term, with the potential for yield compression and value appreciation as the market becomes more closely aligned to those of the more mature western European cities.
Quinn Group, founded 30 years ago as a producer of quarry products, has now grown to become one of Ireland`s most successful companies. The Group has interests in the manufacture of cement and concrete products as well as container glass and general insurance. It is number two in the cement market in Ireland, and the only container glass producer on the island. In addition, the Group has a large property portfolio consisting of 9 hotels, 9 public houses and a fitness club and also runs the fifth largest general insurance business in Ireland, Quinn-direct Insurance Limited. The Group has recently commenced construction of a state of the art container glass plant near Elton, Cheshire, England which will boast on line filling facilities and one of the largest full automated warehouses in Europe in addition to container glass manufacturing facilities” Quinn Group is expected to generate a turnover in 2003 in excess of €600m and a pre-tax profit in excess of €150m. The Group currently employs over 2,600 e
mployees at a number of locations throughout Ireland and the United Kingdom.”