Singaporean sovereign wealth fund GIC announced last week that it had secured a 25 percent stake in the €2 billion ($2.25 billion) European hotel owner-operator citizenM.
The investment makes GIC the third prong in a trio of shareholders now in control of the Dutch group, alongside Indian-born Dutch entrepreneur Rattan Chadha’s KRC Capital and top Netherlands pension fund manager APG, according to a statement by citizenM.
€750M Injection to Fuel “Starbucks-Style” Growth
The three investors have committed a total of €750 million ($844 million) of equity to fund the expansion of the hotel group’s chain of affordable luxury hotels that citizenM-founder Rattan Chadha says takes a “Starbucks-approach” to growth.
“As a long-term global investor, we believe this is a good addition to our overall portfolio of quality assets, and look forward to partnering with the citizenM management team to further add value to citizenM as they expand globally,” said Lee Kok Sun, Chief Investment Officer of GIC.
The citizenM brand represents “an attractive value proposition of affordable luxury in urban markets,” said the GIC official, adding that the hotels are “well-received by consumers who are increasingly placing value in experience and authenticity.”
Founder Rattan Chadha, speaking of the hotel group’s bold expansion plans for the future, said that having GIC on board as an investor would help strengthen the hotel chain’s position as one of the leading affordable luxury brands in the hospitality industry.
Since the launch of citizenM’s first hotel 11 years ago at Amsterdam’s Schiphol Airport, the Tripadvisor ‘Trendiest Hotel in the World’ has added 30 hotels with 7,000 rooms (open and currently under development) across Asia, Europe and the Americas, 24 of these coming in the last five years.
GIC’s Love Affair with European Real Estate
The latest acquisition continues the sovereign wealth fund’s love affair with European hotels, one it has already been pursuing together with APG.
In January of this year GIC announced that it had launched a European hotel investment platform, Archer Hotel Capital, together with its Dutch partner. The platform is based on a portfolio of 11 hotels in Western Europe that the two fund managers had acquired through an earlier joint venture with investor and operator Host Hotels and Resorts.
According to media reports, APG and the Singapore sovereign fund had spent approximately €700 million late last year to buy out Host’s 33 percent stake in the €2.1 billion portfolio.
In February 2018 GIC had teamed up with Saudi Arabia’s Public Investment Fund, Colony NorthStar and other investors to buy an initial 55 percent stake in AccorInvest, a hotel investment platform managed by France’s Accor which held a portfolio of 891 hotels at the time, the majority of which are said to be in Europe.
Then in October last year, GIC agreed to acquire Tour Ariane, a 40-storey office tower in Paris, for about €465 million (US$539 million), as it continued to grow its portfolio of real estate assets across three continents, with 52 percent still in Asia, another 20 percent in Europe and 28 percent in the Americas.
GIC’s Real Estate Spending Spree Unabated
The sovereign wealth fund made a flurry of real estate investments at the end of last year, taking stakes in properties in Australia and Shanghai.
In November 2018, GIC set up a A$2 billion ($1.44 billion) unlisted trust with Australian REIT, Dexus, to invest in logistics properties down under, taking 25 percent of its core portfolio, with rights to acquire an additional 24 percent by June 2020.
In the same month, Singapore’s CapitaLand announced its Raffles City China Investment Partners III (RCCIP III) fund had formed a 50:50 joint venture with GIC to acquire the Star Harbour International Center project in Shanghai’s Hongkou district for RMB 12.8 billion (about $1.85 billion).
GIC does not publicly disclose details of its total holdings, but the fund had $390 billion of assets under management as at the end of June 2018, according to the US-based Sovereign Wealth Fund Institute.