Aareal continues run of hotel financings with Starwood acquisition loan

The German lender, which has over €11bn allocated to the asset class, played a key role in the UK financing.

German lender Aareal Bank, which has closed several large-scale hotel financing deals in recent months, has played a key role in the financing of Florida-based investment firm Starwood Capital’s acquisition of a 10-hotel portfolio in central London.

The portfolio, which Starwood purchased in January from Edwardian Group, comprises 10 hotels with 2,053 rooms operated under the Radisson Blu brand.

“We feel very positive about the future of the hospitality industry, and this transaction was a unique opportunity to finance a portfolio of well positioned hotels within one of the strongest hotel markets worldwide,” Bettina Graef-Parker, managing director of special property finance at Aareal, told Real Estate Capital Europe.

The portfolio’s value is understood to be £800 million (€936.8 million) and the financing, secured against eight of the assets, was reported to be at 50 percent loan-to-value by real estate publication React News. According to the publication, the facility was a club deal also involving banking groups HSBC, Santander, and Clydesdale.

In a statement, Aareal said it acted as arranger, facility agent, and security agent in the transaction.

Aareal has provided several large loans in the hospitality sector in recent years, including significant transactions in H2 2023. In November, it arranged and participated in a €566 million loan to The Social Hub, a hotel chain founded by Scottish businessman Charlie MacGregor.

The senior facility was provided alongside Dutch bank Rabobank and an unidentified third lender. The loan was classified as a green loan under Aareal’s green finance framework. The portfolio consists of 13 properties, comprising 7,000 rooms in the Netherlands, Spain, France, and the UK.

At the time of origination, Michelle Weiss, head of hotel properties at Aareal, told REC Europe the bank’s loan book consisted of €11 billion of hotel financing in 20 countries.  

In September, the bank issued a €210 million senior loan backed by a four-star hotel in Paris. The loan was provided to refinance private real estate manager Henderson Park’s ownership of Le Méridien Etoile, located in Paris – close to the conference and events venue, Palais des Congrès.

Real estate consultant JLL reported in January 2024 that global revenue per available room in the sector has exceeded 2019 levels by 12 percent – led by the Middle East, Europe and the US – but there remains room for further growth in 2024.