French banks’ €300m show of faith in the luxury hotel sector

Crédit Agricole and Société Générale have financed Henderson Park’s acquisition of the iconic Westin Paris-Vendôme at a time when luxury hotels are in vogue for investors and lenders.

At a time when prime, income-producing assets are popular among real estate investors, France’s Crédit Agricole and Société Générale have backed Henderson Park’s purchase of the iconic Westin Paris-Vendôme in the country’s capital, with a €300 million senior loan, Real Estate Capital has learnt.

The European real estate investment platform bought the prime hotel from GIC, Singapore’s sovereign wealth fund, for €550 million. The purchase price implies a loan-to-value ratio of 54 percent.

The acquisition comes at a time of “robust growth” in the European hotel sector on the back of “continued investor demand”, real estate advisor CBRE said in a recent report. Hotel real estate investment in Europe reached €21 billion in the 12 months to Q2 2018, which represents a 5.8 percent rise in transaction volumes year-on-year. Investment in France totalled €1.44 billion during the period, down 6 percent year-on-year.

The 428-room Westin Paris-Vendôme occupies a large island site across a full city square block in Paris’s 1st arrondissement, one of the city’s most prestigious areas. The hotel is less than 250 metres from Place Vendôme and Rue du Faubourg Saint-Honoré and overlooks Parisian landmarks including the Louvre Museum, Tuileries Garden and the Seine.

With 13 prime retail units at street level fronting Rue de Rivoli and Rue de Castiglione, the property also benefits from being in one of the French capital’s busiest luxury retail districts. The hotel will continue to operate under the Westin brand.

In addition to the Westin Paris-Vendôme, Henderson Park owns the largest hotel in Paris, Le Méridien Étoile, which it acquired in November 2016. These assets form part of a European hotels portfolio Henderson Park has built over the past two years, which includes the recently opened Grand Hyatt Athens and the London and Birmingham Hilton Metropole hotels in the UK.

“With this landmark acquisition we are fortunate enough to bring one of Paris’s most iconic hotels into the Henderson Park portfolio,” the firm’s founding partner, Nick Weber, said.

“We continue to hold a strong conviction in the strong underlying fundamentals of the Paris hotels market as an investment location, being both one of the top three cities in the world in terms of tourist numbers and, with London, one of only two truly global cities in Europe,” he added.