Today it was announced that APG has committed fresh capital to CitizenM to facilitate the further growth program of this highly successful hotel company. At the same time, it was announced that GIC, Singapore’s sovereign wealth fund, has acquired a stake of 25% in CitizenM, valuing the company at approximately €2 billion. In addition, GIC and founder Rattan Chadha (through KRC Capital) have also committed further equity to accelerate the growth of the company. In total, CitizenM will have €750 million of additional equity available to invest.
Strong investment case
APG invests in hotels for its pension fund clients because they demonstrate an attractive risk/return profile. “Hotels benefit from various megatrends. Think for instance of the increase in global tourism, in part driven by an emerging middle class around the world’ says Robert-Jan Foortse, head of European Property Investments. He also mentions the growing importance for people to have experiences. ‘Modern travelers are looking for experiences and tend to put less value on material things. Travel is an important experience in their lives. Nowadays, modern travelers, including millennials, have different expectations when they are looking for accommodation.’
The investments in hotels have performed very well over the past years. Growing tourism and increase in business travel have led to higher occupancy numbers, and increasing room rates. As a result, the value of the hotels which are mostly located in central city locations has increased, leading to double digit returns from these investments. which equates to roughly 5% of the total real estate portfolio of €42 billion.
Next to the aforementioned CitizenM and Archer Hotel Capital, APG also has an investment in a Dutch-based company called The Student Hotel. Furthermore, APG holds private investments in hotels and hotel chains in Brazil and India, as well as investments in various publicly-listed hotel companies around the world. In total, APG’s hotel investments amount to approximately €2 billion.
CitizenM was started 11 years ago and continues to grow rapidly. APG has invested in the company from its inception. CitizenM offers “affordable luxury for the people” and currently has 15 hotels in operation in cities like Amsterdam Rotterdam, London, Paris, Copenhagen, New York, and Taipei. In addition, the company has 25 hotels under development in top global cities, amongst others including Boston, Seattle, San Francisco, Los Angeles, Washington, Miami, Shanghai and Kuala Lumpur.
Recently, it was also announced that APG, through Archer Hotel Capital, had increased its investment in a number of leading European hotels. Since 2006, APG had been invested with Host Hotels & Resorts and GIC in a company that owns eleven hotels in key European cities with an asset value in excess of €2 billion. Together with GIC, APG has now acquired the interest that was owned by Host Hotels. For that purpose, Archer Hotel Capital was created to own the eleven hotels are now part of this newly-created joint venture.
The hotels are located in Western European cities like London, Barcelona, Brussels, Paris and Berlin. Archer Hotels also has two hotels in the Netherlands, the Hilton at Schiphol and the Renaissance Hotel in Amsterdam.