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Germany ‘real estate heaven’ means more loans
April 3 2013

Germany's stable economy has lenders feeling more comfortable about providing loans to the country’s hotel sector, sources said.

  • Germany saw double-digit growth in the number of visitor arrivals from the Gulf Countries, Russia, and China during 2012, according to Horwath HTL’s Tom Goldscheider.
  • “Germany is still perceived as unsexy but stable, with a focus on the big cities,” said Clifford Chance’s Andreas Gravenhorst.
  • Interest rates remain low at around 3% to 4%, Vision Hospitality’s Joseph Fischer said.
By Shawn A. Turner
HNN contributor

GLOBAL REPORT—The stable performance of Germany’s hotel sector is making it a prime target for hotel lending, financing experts report.

The country has been an island of relative safety in Europe, which has lenders feeling more comfortable about lending, sources interviewed for this report said. Year-to-date through February, Germany’s occupancy increased 0.3% to 59.3%; average daily rate grew by 1.3% to €93.34 ($119.81); and revenue per available room was up 1.7% to €55.40 ($71.11), according to STR Global, sister company of

There are 380 hotels scheduled to open during the next three years in Germany as developers look to capitalize, according to Tom Goldscheider, partner with Horwath HTL. In an email, he said Germany saw double-digit growth in visitor arrivals from the Gulf Countries, Russia and China.

“There is a lot of money coming into Germany,” said Andreas Gravenhorst, counsel at law firm Clifford Chance’s office in Frankfurt. “Germany is still perceived as unsexy but stable, with a focus on the big cities.”

Oliver Gruss, senior director at Germany’s Deutsche Pfandbriefbank AG, said the bank has noticed an uptick in the number of lending applications that have been submitted.

“Surveys show that there is still appetite for hotel investments, especially as the country is seen as … ‘real estate heaven,’” Gruss wrote in an email.

Josh Littman, director of development for the Europe, Middle East and Africa region for Hard Rock Hotels & Casinos, said he is not surprised by the lender interest in Germany given the country’s hotel performance when compared with other European nations.

“People are looking for the no-brainers right now,” he said.

Lending terms
Gruss said Deutsche Pfandbriefbank is a relatively new entrant to the hotel financing scene, having just become active in the sector last year.

“We are happy to provide funding for hotels on a selective basis as long as the parameters match our conservative risk profile,” he said.

Gruss said obtaining loan to value of approximately 50% “should be feasible” in Germany.

“However, as is always the case, the market prefers transactions where the financials show a robust historic performance and the operator can demonstrate a proven track of performance,” he said.

Interest rates are still low in Germany, hovering at around 3% to 4%, said Joseph Fischer, head of Israeli consulting firm Vision Hospitality & Travel.

“It’s easier for the banks to look at the past performance,” Fischer said.

Joseph Fischer
Vision Hospitality & Travel

Hotels operating under a lease agreement are seeing LTVs of 60% to 70%, according to a December 2012 German bank lending survey conducted by HVS. Further, banks surveyed identified personal guarantees (cash, lien on equity or other assets) as the most necessary factor that must be in place in determining the success of getting a hotel loan.

“We are delighted to confirm our survey of German banks indicates a healthy appetite for hotel investments,” survey authors Luisa Pott and Arlett Oehmichen said in the report. “Financiers are not giving the money away and remain sensible/prudent, but for the right transaction a proper amount of debt is available at the right price.”

Still, there remains the possibility that Europe’s macroeconomic issues could sink Germany’s strong—for now—lending climate. A majority of the respondents to HVS’ survey said loan volumes and amounts could decrease as lending constraints continue across the continent.

Deutsche Pandfbriefbank’s Gruss, however, remained optimistic over the outlook for Germany’s lending market, for 2013, at least.

“As a country with strong economic performance, Germany still counts as (an) attractive location for the hotel industry,” he said. “Performance, not only in the top locations, is promising. We expect that to continue on” during 2013.’s Patrick Mayock contributed to this report.

4/4/2013 3:34:00 PM
No upside for owners in Rhineland.
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