HVS International

European Hotel Transactions Article 2002 Country Analysis

Presented by Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 1

European Hotel Transactions 2002

Single Asset The UK continues to dominate the European single asset investment Transactions by market, recording a total of 30 qualifying transactions in 2001, some 37% Country of total transactional activity. Other European countries with significant publicly available sales activity included Spain (13), Germany (9), France (6), Sweden (4), Belgium (4), Austria (4) and Ireland (2). In 2002 the UK continues to be the most liquid hotel market, with, up to September year-to-date, ten qualifying transactions representing 28% of all activity and 35% in terms of total investment volume.

Figure 1 Sales Activity by Country 2001-02 (Based on Number of Transactions)

2002 year-to-date 2001 Hungary Belgium Austria Ireland 5% 3% Other 5% Germany UK 3% 3% 12% 28% Sweden UK 5% Italy 37% 6% France Denmark 8% 9% Spain Spain 18% Germany Ireland 16% France Sweden Other 11% 6% 6% 9% 10%

The total number of rooms sold in 2001 increased over 2000 levels by approximately 9%, equating to over 17,000 rooms. The UK has historically been the most liquid investment market due to its transparency, its legal system, the positive economic outlook and a well- developed and distinct hotel market. Furthermore, the UK historically has received the highest inflow of US capital of all the European countries. Nevertheless, the increase in single asset investment since 1998 has been largely driven by increased investment in both the German and the Spanish hotel markets, and, to a lesser extent, in France, Belgium and Italy, principally as a result of benefits of EMU convergence, resulting in the simplification of cross-border tax and legal issues.

Of the main European countries, France, the UK and Belgium all recorded a sizeable increase in transaction activity by rooms sold in 2001. In contrast, Spain suffered a 34% decrease. Meanwhile, the eastern European investment market was particularly buoyant in 2001 compared with the previous year, achieving an astounding 338% rise in investment activity by rooms sold, albeit from a small base. This positive trend has

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 2

continued into 2002, although not at the same level of growth as achieved in the previous year. Nevertheless, this illustrates an increase in investor confidence and a reduction in the perceived risk involved in the region as countries such as the Czech Republic and Hungary come closer to meeting the criteria necessary for their joining the EU.

In today’s market factors such as the desire to gain increasing international presence, the limited availability of quality products, a common currency such as the euro and new sources of investment capital have all influenced the European hotel investment market.

Figure 2 Transactions by Country/Region 2000-02 YTD (By Sales Volume € 000,000s)

UK

Spain

Germany

France

Austria

Eastern Europe

Benelux

Scandinavia

Other

0 100 200 300 400 500 600 700 800 900 1,000

2002 YTD 2001 2000

The average price per room paid in 2001 was approximately €191,000, compared with €144,000 in the previous year. While this clearly indicates a higher price per room, this contradicts the trend recorded in the HVS European Hotel Valuation Index 2002, which recorded a 1.8% decrease in 2001 in the value per room compared with a 10.4% increase the previous year. The reason for this variance can be explained by the fact that the majority of sales which took place in 2001 occurred prior to 11 September. The sale price achieved in 2001 was strong due to the positive trading conditions in 2000, and, although 2001 experienced a slowdown in the global economy, expectations were set for a strong year-end and a positive momentum leading into 2002. The HVS European Hotel Valuation Index 2002, however, was based upon full year trading for 2001, thus depicting the difficult trading environment and uncertainty that suddenly came about during the last quarter of 2001, and one which also painted a much bleaker picture for 2002.

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 3

In 2001, single asset transactions had a record year in terms of investment activity, with the slowdown only becoming apparent in the current year. In 2002, total single asset investment activity has fallen by approximately 45% for the year to-date (September) to approximately €1.1 billion, although the average price per room has fallen only 4%, distorted by the sale of two quality hotel assets, the ANA Grand Hotel in Vienna and the Hilton London Park Lane. These two assets alone account for a third of the total value of transactions in 2002 to date. Excluding the sale of these two hotels, the average price per room sold would have fallen by some 26%.

Figure 3 Average Price per Room by Country/Region 1999-02 (€ 000s)

350

300

250

200

150

100

50

0 F G U S S B E r p c a a e K a a en s n rm i n e t c a n d l er e n in ux n y a E v u ia r op e

2002 YTD 2001 2000 1999

Cross-Border Activity In support of the growing trend towards internationalisation, approximately 64% of acquisitions in 2002 year-to-date took place within the buyer’s country of origin, compared with 80% in 1999. Despite the European investment market continuing to be predominantly domestic, pan-European investment has been spurred on by EMU convergence and a greater number of cross-border investors.

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 4

Figure 4 Cross-Border Activity 1999-02

20% 35% Foreign 29% 36%

80% 65% Domestic 71% 64%

0% 10% 20% 30% 40% 50% 60% 70% 80%

2002 2001 2000 1999

Market Review – Historically, Austria’s hotel investment market has remained relatively Austria illiquid, with some investment in the capital Vienna. In recent times investor interest has increased, largely as a result of improved operating performances and changes in German tax laws, which have motivated German funds to invest in Austria where the tax system is more favourable.

Figure 5 Single Asset Transactions in Austria 1999-02

5 200

4 150 3 100 2 € Millions 1 50 No. of Transactions 0 0 1999 2000 2001 2002

Transactions Approx Transaction Value

Vienna has recorded the second most significant European single asset transaction so far in 2002, following the recent sale of the 205-room ANA Grand Hotel Wien to JJW Hotels for approximately €88 million (€428,000 per room). This transaction followed two important transactions in 2001. First, the sale of a development with an operating lease for a 295-room Le Méridien hotel to the German open-ended fund DEKA for €100 million (€339,000 per room). Second, the sale of the 600-room Hilton for approximately €69 million (€115,000 per room) to the Austrian construction company Soravia Bauträger, as part of SAirGroup‘s rationalisation programme.

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 5

Figure 6 Single Asset Hotel Transactions in Austria – Average Price per Room Sold 1999-02

1200 500 1000 400 800 300 600

200 € 000s 400 Rooms Sold 200 100 0 0 1999 2000 2001 2002

Rooms Sold Average Price per Room Sold

Austria has benefited from improved operating performance in recent times, which is likely to attract greater investment to the region. Furthermore, cross-border activity with Germany is likely, as German investors take advantage of tax benefits and the opportunity to acquire quality hotels in prime locations. Further acquisitions within the Viennese hotel market can be expected, with both the Imperial and the Bristol hotels forming part of Starwood’s Ciga portfolio, which is currently on the market.

Belgium Historically the Belgian hotel investment market has been relatively illiquid, due to an oversupply of hotels and relatively weak trading performance. Nevertheless, in recent times its capital Brussels, has experienced a change of fortune with improved operating performances, thus resulting in a number of significant single asset sales over the past two years.

Figure 7 Single Asset Transactions in Belgium 1999-01

5 200

4 150 3 100 2 € Millions 50

No. of Transactions 1

0 0 1999 2000 2001

Transactions Total Transaction Value

In 2000 Rocco Forte Hotels purchased the 183-room Hotel Amigo for approximately €26 million (€141,000). Meanwhile, in 2001 a further four hotels changed hands, including the Radisson SAS to Germany’s open-

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 6

ended fund DIFA, its first non-domestic acquisition. The freehold property transacted for approximately €85 million (€302,000 per room). Meanwhile, the 262-room Swissôtel was sold by Bannimo Real Estate to the Belgian group City Hotels. The hotel, which included a block of residential apartments, was sold with vacant possession for approximately €40 million (€142,000 per room), and has since been rebranded to Renaissance Hotels.

Figure 8 Single Asset Hotel Transactions in Belgium – Average Price per Room Sold 1999-01

900 250 800 700 200 600 150 500

400 € 000s 100 Rooms Sold 300

200 50 100 0 0 1999 2000 2001

Rooms Sold Average Price per Room Sold

Total investment activity equated to approximately €180 million in 2001. No transactions have yet taken place in 2002, although investor interest remains strong despite a significant fall in RevPAR in 2002. With investors keen to gain representation in this market, yet with few opportunities available, investors are having to turn to development. Nevertheless, this market remains relatively weak, especially compared to its European counterparts, and a fall in operational profits may result in fewer hotel transactions in the short term.

Central and Eastern In the main, hotel investment activity is centred on Prague, Warsaw and Europe Budapest, although, increasingly, other markets such as Moscow, Sofia and Zagreb are coming into play. Only one publicly reported transaction was recorded in 2000: the 314-room Renaissance Hotel in Prague was sold to Hospitality Europe for €64.8 million (€206,000 per room). However, in 2001 five hotels transacted, equating to approximately €460 million. Hotels that exchanged hands included the 162-room Four Seasons Hotel in Prague for approximately €70 million (€431,000 per room) to the Quinlan Partnership and the 406-room InterContinental Warsaw, for approximately €175 million (€430,000 per room) to a group of foreign investors including Six Continents. Meanwhile, Hungary’s national airline, Malev, sold its 50% stake in the Atrium Hotel company,

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 7

the owner and operator of the 353-room Hyatt Regency in Budapest, to its co-owner and operator Pannonia Hotels for a reported €25 million. Pannonia has since sold the company, in July this year, to HVB Leasing for €50 million but will continue to operate the hotel under a 22-year lease agreement.

Figure 9 Single Asset Transactions in Central and Eastern Europe 1998-02

6 500

5 400 4 300 3 200 2 € Millions No. of Transactions 1 100

0 0 1998 1999 2000 2001 2002

Transactions Total Transaction Value

Prague has enjoyed the strongest trading performances and is arguably the most liquid investment market within the region, followed by Budapest and Warsaw. All three countries are likely to be ready for EU membership from the beginning of 2004. Indeed, the recent increase in investment activity, particularly within Prague and Budapest, is a sign that investors perceive there to be less risk associated with these markets than in the past. To a certain extent both Budapest and Warsaw have suffered from oversupply of hotels; however, there are some signs that the balance between supply and demand is being restored.

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 8

Figure 10 Single Asset Hotel Transactions in Central and Eastern Europe – Average Price per Room Sold 1998-02

1,600 400

1,400 350

1,200 300

1,000 250

800 200 € 000s

Rooms Sold 600 150

400 100

200 50

0 0 1998 1999 2000 2001 2002

Rooms Sold Average Price per Room Sold

France The majority of all hotel investment activity in France centres around its capital, Paris. Following a year dominated by corporate transactions during 1999 (including the €504 million disposal of the Vivendi portfolio), the hotel market witnessed a number of single asset transactions during 2000 and 2001, as investors realised their capital gains following three years of strong trading. Hotels transacted during 2000 totalled approximately €160 million and included the leasehold interest in the 111-room Hotel de la Tremoille for €23 million (€207,000 per room) and the 388-room Hyatt Regency Charles de Gaulle Airport for €50 million (€130,000 per room). In 2001 the most significant transaction was the purchase of the 764-room Nikko Hotel by Accor and the US private investment fund Colony Capital for €100 million (€131,000 per room). In addition, approximately 2,000 rooms exchanged hands in the Parisian market as part of Nomura’s acquisition of Le Méridien, which included Le Méridien Montparnasse and Le Méridien Etoile. Meanwhile, in terms of portfolio sales Accor’s ten-strong Parisian chain of Jardins de Paris Hotels, some 429 rooms, was sold to SITQ for an undisclosed sum.

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 9

Figure 11 Single Asset Transactions in France 1998-02 10 200 9 8 150 7 6 5 100

4 € Millions 3

No. of Transactions 50 2 1 0 0 1998 1999 2000 2001 2002

Transactions Total Transaction Value

In 2002 the Parisian hotel market is suffering due to its high exposure to the transatlantic market and the general slowdown in the global economy. Nevertheless, with signs of improved trading conditions, investors are more likely to find more suitably priced assets, hence improving the liquidity of the market. Where investment activity is likely to take place, we envisage institutional and private equity investors to continue to show strong interest, as well as those hotel companies, as yet not represented in the market, seeking to gain entry. The limited opportunity for development in the city as a result of strict building regulations is likely to mean that further transactions will occur in 2002, particularly at the top end of the market with the Ritz rumoured to be currently on the market in 2002. In 2002, two hotels have transacted to date, but both are in resort locations. The 692-room Cannes Beach Residence was acquired by Pierre et Vacances for approximately €32 million (€46,000 per room), the hotel is due to undergo renovation that will elevate it to four-star status; meanwhile, the 329-room Radisson SAS in Nice was acquired by the UK property company Capital and Income Trust Group for approximately €24 million (€74,000 per room).

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 10

Figure 12 Single Asset Hotel Transactions in France – Average Price per Room Sold 1998-02

2,000 400

1,500 300

1,000 200 € 000s

Rooms Sold 500 100

0 0 1998 1999 2000 2001 2002

Rooms Sold Average Price per Room Sold

Germany Germany experienced a surge in investment activity in 2000 with total investment volumes exceeding €610 million, which is considered to be exceptional and unlikely to be repeated in the short term. HVS recorded a total of 19 transactions, including the 202-room Four Seasons Berlin for €86 million (€428,000 per room) to the German closed-ended fund HGA Grundbesitz und Anlage, the 510-room InterContinental Hotel Berlin for approximately €141 million (€276,000 per room) to German open-ended fund DIFA, and the Marriott Hotel in Hamburg to US-based Strategic Hotel Capital for €45 million (€164,000). In 2001 reported investment activity continued to be strong but failed to reach the level recorded in the previous year. HVS recorded some nine transactions with a total volume of approximately €350 million. A significant proportion of four-star and five-star hotels are owned by closed-ended and open-ended funds. These properties are typically leased to operators for 20 to 30 years on fixed rental terms. Institutions, due to their long-term investment horizon of 20 to 40 years, have little incentive to dispose of these stable investments. In addition, these investors accept significantly lower yields than UK or US funds, which have much shorter investment horizons, often of less than ten years. Nevertheless, demand for hotel investment remains strong, but is characterised by the limited availability of product, principally due to the strong representation of domestic institutional investors. By far the largest deal was the sale of the 406-room Maritim ProArte Hotel in Berlin to Allgemeine Leasing for approximately €119 million (€293,000 per room). Dr Ebertz & Partner was particularly active; acquisitions included the 195-room Nassauer Hof in Wiesbaden for €39 million (€190,000 per room), the Holiday Inn Bonn for €25.6 million (€102,000 per room) and the Park Hotel Bremen for €22 million (€140,000 per room). Several more transactions occurred in Germany in 2001; however, the transaction prices have not been made public. These include the Ritz-Carlton Schlosshotel Berlin (now rebranded to Regent International) to Dr Ebertz

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 11

& Partner and the Rema Savoy Hotel (now rebranded to Starwood’s Four Points) by Westmont Hospitality.

Figure 13 Single Asset Transactions in Germany 1998-02

25 700 20 600 500 15 400 10 300 € Millions 200

No. of Transactions 5 100 0 0 1998 1999 2000 2001 2002

Transactions Approx Transaction Value

2002 has witnessed only one reported single asset transaction to-date: the 232-room Novotel Düsseldorf turnkey project for €32.5 million, including 12,000 m² of office space, to Deutsche Bank. A much greater level of activity has taken place on the portfolio side; first, Accor’s strategic 30% stake in Dorint, and, second, the acquisition by NH Hoteles of the 53-strong Astron Hotels portfolio for €130 million (€16,000 per room). The outlook for the remainder of 2002 is dependent upon the German economy, due to its heavy reliance on domestic demand. Nevertheless, with recent poor performances on the global stock markets, property is increasingly regarded as a safe haven, due to its long-term investment nature. We therefore envisage that the interest shown by German institutional investors is set to continue in Germany and increasingly abroad.

Figure 14 Single Asset Hotel Transactions in Germany – Average Price per Room Sold 1998-02

5,000 250 4,000 200 3,000 150 2,000 100 € 000s

Rooms Sold 1,000 50 0 0 1998 1999 2000 2001 2002

Rooms Sold Average Price per Room Sold

Italy The Italian single asset hotel investment market has remained relatively illiquid over the past few years, with only one reported transaction each

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 12

year between 1998 and 2001. In 2002 two hotels have exchanged hands to-date: the Central Palace Hotel in Sicily and the Palace Hotel in Naples. The two hotels were purchased by Una Hotels & Resorts for €23.8 million (€119,000 per room). In 2001, the 24-room Caruso Belvedere Hotel in Ravello was sold for an impressive €31 million to Orient-Express Hotels (€1.3 million per room), the hotel is currently under reconstruction and is due to reopen in spring 2003. Meanwhile, in 2000 the Hotel Baglioni in Florence was sold to Star Hotels for €20 million (€122,000 per room). With respect to portfolio activity, the sale of the Le Méridien portfolio involved a number of Italian properties, including the Forte Village in Sardinia and the Hotel Eden in Rome.

Figure 15 Single Asset Transactions in Italy 1998-02

3 70 60 2 50 40 30

1 20 € Millions

No. of Transactions 10 0 0 1998 1999 2000 2001 2002

Transactions Total Transaction Value

Italy’s hotel investment market is set to become more liquid in the short term with the intended disposal of Ciga, which has attracted significant interest from both international and domestic investors. The outcome of the entire portfolio remains unclear; however, Ciga’s four Sardinian properties and the Pevero Golf course, some 379 rooms, are reported to have been sold to a group of Italian investors for €351 million. (Neither the Ciga portfolio nor the two Le Méridien hotel transactions is shown in Figure 15 or Figure 16, which depict single asset hotel transactions only.)

Figure 16 Single Asset Hotel Transactions in Italy – Average Price per Room Sold 1998-02

250 1,400 1,200 200 1,000 150 800 600

100 € 000s

Rooms Sold 400 50 200 0 0 1998 1999 2000 2001 2002

Rooms Sold Average Price per Room Sold

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 13

The Netherlands Due to the relatively small size of the Dutch hotel market, the investment market in the Netherlands has largely focused on Amsterdam. In 1999, the Cok City Hotel Amsterdam transacted for approximately €10 million (€91,000 per room). Meanwhile, two transactions were reported in 2000, the most significant being the 279- room Radisson SAS Schiphol Airport to Miller Global for approximately €48 million (€171,000 per room). The second transaction was the 76-room Hotel des Indes, in The Hague, to a private group of investors. No single asset transactions which meet our criteria (hotels transacting at or above €7.5 million) were recorded in 2001 or year to-date 2002, although most recently, the private equity fund Hospitality Europe announced that it is to sell both the 230-room Sheraton Hotel Pulitzer and the 408-room Sheraton Hotel Schiphol Airport, both of which are in Amsterdam.

Figure 17 Single Asset Transactions in The Netherlands 1999-00

3 80

60 2 40

1 € Millions 20 No. of Transactions 0 0 1999 2000

Transactions Total Transaction Value

On the portfolio side, Camp Kleyn acquired the eight-strong AMS Group in 1999. This was followed in 2000 by NH Hoteles’ acquisition of the 64- strong Krasnapolsky group for €495 million. In 2001 Le Méridien Apollo Hotel was sold as part of Compass’s disposal of the Le Méridien portfolio to Nomura.

Figure 18 Single Asset Hotel Transactions in The Netherlands – Average Price per Room Sold 1999-00

400 250

300 200 150 200

100 € 000s 100 50 No. of Rooms Sold 0 0 1999 2000

Rooms Sold Average Price per Room Sold

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 14

Despite a weakening in trading performance following a particularly strong year in 2000, investors remain keen to gain representation. However, the market remains relatively illiquid, partly due to the lack of product available and partly due to owners’ lack of motivation or need to sell.

Spain As the Spanish hotel market has matured over recent years it has become more sophisticated and resulted in a shift towards greater international sources of investment. Local investors remain prominent; however, evidence of international and institutional investors entering the market is apparent. Examples include Palamon Capital buying a 37.5% stake in High Tech Hotels & Resorts, and a consortium led by Deutsche Bank becoming the successful purchaser of the Hotel Arts complex for €285 million.

Madrid and Barcelona are considered key investment markets, spurred on by strong trading performances. Limited opportunities exist, however, due principally to a lack of liquidity, fuelled by the dominance of domestic companies and the fragmented ownership structure of the market. As a means of gaining representation Spain has been characterised by aggressive development. Companies such as AC Hotels, Accor, High Tech, Catalonia, Six Continents, and Zenit Hotels are keen to increase their presence in city centre locations, as are traditional resort operators such as Hoteles Playa, H10, and Fiesta Hotels: all aim to diversify their hotel portfolios into major cities.

The Spanish hotel market has historically experienced a high level of activity in the resort market, with Germany and the UK important feeder markets. European tour operators have justified the importance of the Spanish resort market with a number of key transactions. Airtours (now MyTravel), for example, acquired the Bellevue Hotel in Majorca as well as both the Globales and the Hotetur hotel chains.

In 2001 the total number of room which transacted declined by approximately 34% upon the previous year; however, total investment activity increased by some 42%, totalling approximately €600 million. The reason for the growth in transaction volumes was due to the quality of assets exchanging hands. The 482-room Hotel Arts complex was sold to a consortium of investors led by Deutsche Bank AG’s Real Estate Private Equity group, together with Patron Capital Partners and a number of other investors. This deal, which represented Europe’s largest single asset transaction in 2001, transacted at approximately €285 million and included 27 luxury apartments, approximately 13,000 m² of retail space, 12,000 m2 of office space and a casino. The hotel component of the Hotel Arts complex is understood to have represented between 85% to 90% of the transaction price. In 2002, six transactions have completed to date, totalling some €145 million. Hotels transacted include the 63-room La Residencia in Majorca to Orient-Express Hotels for €24 million

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 15

(€381,000 per room), the 368-room Hotel Diagonal 1 project in Barcelona, due to open in 2004, to Princess Hotels for €69 million (€188,000 per room) and the 144-room Illa del Cel Hotel Barcelona, which is currently under construction, to Vincci Hotels for €24 million (€167,000 per room).

The disposal of development sites with hotel projects under construction, has been the driving force behind much of the investment activity in the single asset hotel transaction market. This trend sets Spain apart from other European hotel investment markets and looks set to continue into 2003.

Figure 19 Single Asset Transactions in Spain 1998-02

14 700 12 600 10 500 8 400 6 300

4 200 € Millions

No. of Transactions 2 100 0 0 1998 1999 2000 2001 2002

Transactions Total Transaction Value

The last major portfolio sale to have taken place within the Spanish market was Sol Meliá’s acquisition in 2000 of the 60-strong Tryp Hoteles for €360 million at a reported 10% yield. Consolidation within the Spanish market is set to continue in the short to medium term following the diffusion of several domestic, privately run hotels resulting in several new hotel chains such as Grupo Bali, Monarque Hoteles and Gestión Hotelera La Marina.

Of considerable interest, at least in terms of strategic change, is the sale and leaseback transaction in 2002 involving NH Hoteles and the Spanish investment company Pontegadea Immobiliaria. The deal involved four 20-year leasehold properties, some 643 rooms, for a price of €91.4 million, with a fixed rent payment indexed annually with inflation. NH Hoteles then used the capital to finance its purchase of 80% of Astron Hotels of Germany.

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 16

Figure 20 Spanish Single Asset Hotel Transactions – Average Price per Room Sold 1998-02

5,000 250 4,000 200 3,000 150

2,000 100 € 000s

Rooms Sold 1,000 50 0 0 1998 1999 2000 2001 2002

Rooms Sold Average Price per Room Sold

The outlook for the future remains positive despite a softening in trading performance, an increase in hotel supply and the potential damage to the tourism industry from the Basque separatist group ETA. Nevertheless, we envisage that the Spanish market will become more liquid, with international investors likely to become increasingly dominant.

Scandinavia In the main, hotel investment activity has historically been characterised by domestic investors and is centred on the capital cities, with Stockholm the most liquid investment market within the region, followed by Copenhagen.

Figure 21 Single Asset Transactions in Scandinavia 1998-02 9 8 175 7 150 6 125 5 100 4 75 3 € Millions 50 No. of Transactions 2 1 25 0 0 1998 1999 2000 2001 2002

Transactions Total Transaction Value

In 1999 all transactions recorded within our survey took place in Sweden, representing some €160 million of investment. The most notable transactions included the 198-room Scandic Park in Stockholm for €34.1 million (€172,000 per room) and the 111-room Scandic Hasselbacken in Stockholm for €43 million (€387,000 per room).

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 17

The number of single asset transactions in 2000 was less than it was in the previous year, as investors chose instead to reap the benefits of a strong trading year. Nevertheless, investment activity in 2000 was shared between the Scandinavian countries. Transactions included the 495- room Ramada Hotel President in Helsinki for €36.3 million (€73,000 per room), the Radisson SAS Plaza in Oslo for €30.8 million (€45,000 per room) and the 287-room Quality Globe Hotel in Stockholm for €35 million (€122,000 per room).

In 2001, with a softening in market conditions, a number of investors decided to exit the market, but with activity limited only to Sweden, this resulted in a decline in the number of transactions compared with the previous year. HVS recorded four single asset deals, with a total investment value of €79 million. The transactions included the sale of the 328-room Scandic Hotel Malmen in Stockholm for approximately €30 million (€90,000 per room) to Capona, the 151-room Stockholm Plaza to SSRS Holding for €20 million (€135,000 per room) and the 150-room Mr Chip Hotel to Pandox for €13.5 million (€89,000 per room).

Single asset activity in 2002 has been considerably stronger than it was in 2001, aided by the sale of three Radisson SAS hotels in Norway to Wenaas Hotels for €156 million (€155,000 per room). Three further transactions have taken place in Sweden, the most notable of which was the sale of the 212-room Scandic Hotel Anglais in Stockholm to the Swedish company AFA Sjukförsäkrings for €63.1 million (€298,000 per room).

Figure 22 Single Asset Hotel Transactions in Scandinavia – Average Price per Room Sold 1998-02

2,000 200

1,500 150

1,000 100 € 000s

Rooms Sold 500 50

0 0 1998 1999 2000 2001 2002

Rooms Sold Average Price per Room Sold

In 2000 the Scandinavian portfolio hotel market started to consolidate with Scandic’s acquisition of the Swedish company Provobis. The transaction, which involved 17 properties and some 3,000 rooms, completed for a purchase price of approximately €71 million. As a result of this corporate sale, Scandic later disposed of five properties that did not fit within the company’s structure or brand image.

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 18

In 2001, portfolio activity in Scandinavia was exceptional, as Scandic itself became a victim of the consolidation game, snapped up by Hilton for approximately €1 billion. The acquisition provided Hilton with control of the Scandinavian market, some 154 hotels and 26,500 rooms.

In 2002 and beyond, international investors are expected to show continued interest in the Scandinavian market. But relatively few opportunities exist, making Hilton’s acquisition of Scandic all the more important.

The UK Historically, the UK has dominated the European hotel investment market, and this generally continues to be the case today. In 2001 the UK represented 37% of all single asset transactions recorded by HVS International (based on rooms sold) compared with 46% in 1999. HVS recorded some 30 deals in 2001, of which only seven transactions involved central London hotels. The most significant single asset sale resulted from the disposal of one of Compass’s Signature Hotels, the Cumberland. Nomura’s Principal Finance Group acquired the hotel for approximately €238 million (€267,000 per room), achieving an initial yield of around 7.3%. The second-largest single asset transaction was the 216- room Berners Hotel for €81 million to JJW Hotels & Resorts (€377,000 per room).

London’s single asset sales in 2001 improved marginally on the previous year in terms of sales volume, by 8%, totalling some €494 million (including two hotels at Heathrow). The UK provincial market proved more liquid, with total investment increasing by 84% over the previous year, totalling some €395 million. For the first time investment within the UK provincial market is shown in 2001 to be on a par with the level of investment generated by London.

Figure 23 London and UK Provinces Single Asset Transactions 1998-02

25 1,200

1,000 20

800 15 600

10 € Millions 400 No. of Transactions 5 200

0 0 1998 1999 2000 2001 2002

No. of London Transactions No. of UK Provinces Transactions Total Transaction Value – London Total Transaction Value – UK Provinces

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 19

The effect of the softening in the economy, and a considerable weakening in trading, has resulted in a relatively illiquid market in 2002. This is largely as a result of a significant difference between the asking price of the seller and that which the buyer is prepared to pay.

HVS has recorded four notable London sales to date in 2002, with the most significant transaction (on an average price per room basis) being the sale of the exclusive 53-room, 47 Park Street property (previously flagged under Accor’s Sofitel Demeure brand) for €43 million in a joint venture agreement between Marriott and Orion European Real Estate Fund. This is now being marketed as Marriott’s first Executive Residence in Europe, an up-market, urban fractional ownership product. One further significant transaction involved the sale of a majority stake in the 450-room London Hilton on Park Lane for approximately €248. The sale involves a joint venture agreement between Land Securities, the existing owner, and London & Regional, with the latter taking a controlling interest.

With few other London transactions, the average price per room in 2002 is somewhat distorted, as indicated in Figure 24.

Figure 24 UK Single Asset Hotel Transactions – Average Price per Room Sold 1998-02

4,500 600 4,000 500 3,500 3,000 400 2,500 300 2,000 € 000s

Rooms Sold Rooms 1,500 200 1,000 100 500 0 0 1998 1999 2000 2001 2002

Rooms Sold – London Rooms Sold – UK Provinces Average Price per Room Sold – London Average Price per Room Sold – UK Provinces

Portfolio activity in 2001 was exceptional, totalling approximately €4.5 billion. The tremendous level of activity can be attributed to the decision by Compass plc (formerly Granada Compass plc) to sell off its hotel investment portfolio, which was made up of the old Forte empire. Six Continents acquired the 79-strong Posthouse Hotels portfolio for approximately €1.3 billion (approximately €108,000 per room). All Posthouse Hotels have since been rebranded as Holiday Inn, with the exception of around 15 hotels not deemed as suitable for conversion, many of which have since been sold on. Meanwhile, Macdonald Hotels

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 20

acquired the 48-strong Heritage Hotels in a joint venture agreement with the Bank of Scotland for approximately €385.4 million (€124,000 per room).

Prior to the sale of Compass’s various hotel portfolios, the investment vehicle of the Japanese bank Nomura, Principal Finance Group (PFG), entered the UK hotel investment market with the acquisition of the 17- strong Principal Hotel Group for approximately €418.2 million (€167,000 per room). Nomura, under the company name of Grand Hotels (M) Acquisitions, proceeded to successfully acquire the 128-strong worldwide Le Méridien portfolio for €1.9 billion, of which 17 are operated in the UK.

In addition to the disposal of the Compass hotel inventory, much of the investment activity that arose during 2001 was in the form of sale and leaseback structured deals. Nomura financed its acquisition of the Le Méridien portfolio following the sale and leaseback of 12 UK properties. The deal, which was entered into with the Royal Bank of Scotland (RBS), provided funds worth €1.6 billion. Hilton also undertook its first wave of sale and leaseback activity, with RBS once again the investor. The deal involved some 11 properties, and provided funds of €512 million. A third major sale and leaseback deal that completed in 2001 was between Accor and London & Regional: this deal involved some 13 UK properties and raised €98.5 million of capital.

Despite the difficult trading environment of recent times, the momentum of innovative financing deals has continued into 2002. Thistle entered into a uniquely structured ‘sale and managementback‘ deal with the property company Orb Estates. The deal, which involved 37 properties, some 5,500 rooms, completed for €950.5 million. This deal was followed later in the year by Hilton’s entering into its second sale and leaseback, with a further ten hotels, some 2,043 rooms. The deal, in which Hilton itself has taken a 40% equity stake, involved the formation of a limited partnership between Hilton, the property company Rotch, the hotel investment company Farnsworth Group and the Bank of Scotland, and realised a further €488 million of capital after consideration for Hilton’s investment. Most recently Jarvis Hotels has secured a sale and leaseback deal with a private equity consortium led by Lioncourt Capital for €237 million in exchange for a 34-year lease. The deal involves nine UK properties, some 1,341 rooms.

Following the wealth of portfolio deals in the past two years we can expect investors to rationalise their portfolios further than that already witnessed. A cautious outlook seems set to remain for the remainder of 2002, although the hotel investment market is likely to pick up somewhat and improve substantially in 2003. Corporate deals are likely to continue, with further sale and leaseback and other innovative financing deals expected, with the anticipated sale of Travelodge, the UK’s second-largest budget hotel operator, providing considerable

By Philippa Bock and Bernard Forster HVS International European Hotel Transactions 2002 21

interest. Nomura is also rumoured to be disposing of a number of Principal Hotels that have failed to meet Le Méridien’s brand standards. Economic factors such as the continued low interest rates are also likely to boost investment activity.

Conclusion Despite the challenging times experienced in the first six months of 2002, the outlook for European hotel operating markets is positive, although the possibility of war with Iraq and the risk of further terrorist attacks are likely to have an impact upon the future trading environment. Hotel investment activity in 2002 was particularly slow at the start of the year, nevertheless a number of impressive and interesting deals have completed, particularly on the corporate side. In the UK, sale and lease back deals have been at the forefront of this activity, with three publicly quoted companies namely Hilton International, Jarvis and Thistle Hotels all participating in this innovative form of financing and in doing so divesting themselves from the burden of hotel real estate ownership.

In the second half of 2002 a greater number of single asset deals have completed and this positive momentum in the hotel investment market is expected to continue to strengthen and resume the traits and trends set in the previous years. With respect to specific hotel markets, we consider that investment activity in Spain will continue to be strong, Central European markets are expected to become increasingly more active, investor interest will remain strong in Germany and liquidity within the UK hotel investment market will continue, although its dominance within the European hotel investment market is likely to weaken.

As the European hotel industry continues to consolidate, further corporate and portfolio activity is assured. The remainder of the Ciga portfolio and the sale of Travelodge are two portfolios currently on the market. Other smaller and medium sized national and international portfolios are likely to disappear as the hotel investment market continues to intensify. While hotel operators remain keen to extend their global representation, pension funds and institutional investors are likely to feature more prominently in the European hotel investment market.

By Philippa Bock and Bernard Forster HVS International

Sales Price per Sale Date Property City Country Rooms Sales Price Euro Room Euro Buyer Seller 2002 ANA Grand Hotel Vienna Austria 205 87,800,000 428,000 JJW Hotels All Nippon Airways (ANA) 2002 Sheraton-Sofia Balkan Sofia Bulgaria 188 24,075,000 128,000 EFG Eurobank, Axxon Bulagia, Intl Lodging Bulgaria Daewoo Engineering & Construction 2002 Hotel Praha Prague Czech Republic 120 16,934,000 141,000 Falcon Capital Prague 6 Municipality 2002 Radisson SAS Royal Copenhagen Denmark 1004 155,985,000 155,000 Wenaas Hotels Copenhagen Int. Hotels 2002 Radisson SAS Scandinavia Copenhagen DenmarkAs Radisson SAS Royal Wenaas Hotels Copenhagen Int. Hotels 2002 Radisson SAS Globetrotter Copenhagen DenmarkAs Radisson SAS Royal Wenaas Hotels Copenhagen Int. Hotels 2002 Cannes Beach Residence Cannes France 692 32,000,000 46,000 Pierre & Vacance Lucia SA (Colony Capital Group) 2002 Radisson SAS Nice Nice France 329 24,384,000 74,000 CIT (Capital and Income Trust Group of Companies) Morun Corporation NV (Abela Corp) 2002 Novotel Dusseldorf Dusseldorf Germany 232 32,499,000 140,000 Deutsche Bank Subsidiary NCC Property Development 2002 Lindos Memories Hotel Rhodes Island Greece 70 9,000,000 129,000 Mitsis Group n/a 2002 Hyatt Regency (Atrium Hotel) Budapest Hungary 353 50,000,000 142,000 HVB-Leasing Hungary Pannonia Hotel Rt. 2002 Jurys Skylon Hotel Dublin Ireland 186 14,000,000 75,000 McEniff Hotels Jurys Doyle 2002 Jurys Waterford Hotel Waterford IrelandAs Jurys Skylon McEniff Hotels Jurys Doyle 2002 Central Palace Hotel Sicily Italy 200 23,800,000 119,000 UNA Hotels & Resorts Private Individual 2002 Palace Hotel Naples ItalyAs Central Palace Hotel UNA Hotels & Resorts Private Individual 2002 La Residencia Mallorca Spain 63 24,000,000 381,000 Orient Express Hotels Virgin Group 2002 Colombo Hotel Mallorca, Portocristo Spain 140 7,810,000 56,000 Hoteles Catalonia Hotel Colombo SA 2002 Hotel Diagonal 1 (Project) Barcelona Spain 368 69,000,000 188,000 Princess Hotels Espais/Landscape 2002 Illa del Cel Barcelona Spain 144 24,000,000 167,000 Vincci Hoteles Iber Espais 2002 Hotel Maya Alicante Spain 195 10,000,000 51,000 Hotel Maya Prom. Alicantinas 2002 Paradiso Garden Mallorca Spain 135 10,000,000 74,000 Mac Hotels Lucy Hotels 2002 Mornington Hotel Goteborg Sweden 92 10,414,000 113,000 Koncept Fastighets Choice Hotels Sweden 2002 Stadshotellet (Best Western) Eskilstuna Sweden 220 9,318,000 42,000 Debutanten 1124 AB (Home Invest AS) Graflunds Byggnads AB 2002 Scandic Hotel Anglais Stockholm Sweden 212 63,127,000 298,000 AFA Sjukförsäkrings AB AB Hotelinvest & Co KB 2002 Comfort Inn Hotel Birmingham UK 166 8,941,000 54,000 Private Individual Choice Hotels Europe 2002 Quality Hotel Kensington London UK 72 11,954,000 166,000 International Currency Exchange (ICE) Kingston Smith & Partners 2002 47 Park Street - Sofitel Demeure London UK 53 43,033,000 812,000 Orion European RE Fund/Marriott Intl Colony Capital / Blackstone / Accor 2002 Mornington Hotel London UK 66 14,000,000 212,000 Losan Hesperia 2002 Posthouse - Croydon London, Croydon UK 83 8,535,000 103,000 Private Individual Six Continents 2002 Hilton Park Lane London UK 450 247,652,000 550,000 London & Regional/Land Securities Land Securities 2002 Princess Hotel Manchester UK 85 8,115,000 95,000 Carlton Hotels UK Private Individual 2002 Posthouse - Manchester Manchester UK 191 10,567,000 55,000 Britannia Hotels Six Continents 2002 Wood Norton Hall Worcestershire UK 292 12,172,000 42,000 Private Investor Rick Hvizdak BBC Resources 2002 Aldwark Manor Golf & Country Club York UK 60 12,425,000 207,000 Marston Hotels n/a 2001 Hilton Am Stadpark Vienna Austria 600 68,700,000 115,000 Soravia Bautrager GmbH Sodereal Holdings / SAir Group 2001 Le Meridien (Project) Vienna Austria 295 100,000,000 339,000 Deka Fund n/a 2001 Hotel Mate Vienna Austria 172 8,357,000 49,000 Diana Hotels Private Individual 2001 Hotel Dependance Vienna AustriaAs Hotel Mate Diana Hotels Private Individual 2001 Radisson SAS Brussels Brussels Belgium 281 85,000,000 302,000 DIFA Fund Memphis Group 2001 Swissotel Brussels Brussels Belgium 262 37,228,000 142,000 City Hotels SA Bannimo Real Estate 2001 Barsey Hotel Mayfair Brussels Belgium 99 22,300,000 225,000 Private Individual Private Individual 2001 Jolly Hotel Sabon Brussels Belgium 195 34,700,000 178,000 West Invest Private Individual 2001 Excelsior Hotel Dubrovnik Croatia 172 22,348,000 130,000 Private Individual Croatian Government 2001 Four Seasons Hotel Prague Prague Czech Republic 162 69,740,000 430,000 Quinlan Partnership Four Seasons Hotels Inc. 2001 Mont Vallon Hotel Meribel, Alps France 92 13,700,000 149,000 Alp A'zur Hotels Colony Capital 2001 Radisson SAS Etoile Marceau Paris France 46 16,794,000 365,000 Brussels City Hotels n/a 2001 Nikko Hotel de Paris Paris France 764 66,675,000 87,000 Colony Capital/Accor Japan Airlines 2001 Forest Hill Balard Paris France 130 12,954,000 100,000 Saudi Investor n/a 2001 Hotel Development Paris, Roissy France 300 37,500,000 125,000 GI Fund n/a 2001 Hotel Golf Plaza Sainte-Maxime France 111 10,668,000 96,000 JJ France Hotels & Resorts Consortium de Realisation 2001 Pro Arte Maritim Berlin Germany 406 119,000,000 293,000 Allgemeine Leasing Deutsche Interhotel Holding 2001 Ritz-Carlton Schlosshotel Berlin Germany 54 23,000,000 426,000 Dr Ebertz & Partner Albeck & Zehden HVS International

Sales Price per Sale Date Property City Country Rooms Sales Price Euro Room Euro Buyer Seller 2001 Holiday Inn Bonn Bonn Germany 252 25,600,000 102,000 Dr Ebertz & Partner Drott AB 2001 Park Hotel Bremen Germany 150 20,967,000 140,000 Dr Ebertz & Partner Sparkasse Bremen 2001 Astron Hotel (Project) Cologne Germany 205 28,000,000 137,000 Wilhelm Sander Stiftung Kaphag Holding 2001 Hilton Hotel (Project) Cologne Germany 296 54,000,000 182,000 WestInvest InterSelect n/a 2001 Nassauer Hof Wiesbaden Germany 195 37,000,000 190,000 Dr Ebertz & Partner Stinnes Logistik AG 2001 Aukamm Hotel Wiesbaden Germany 158 19,429,000 123,000 Astron Hotels Private Individual 2001 Hotel Rose Wiesbaden Germany 30 21,475,000 716,000 Subsidiary of Hessische Landesbank BBV Immobilien Fonds 2001 Hyatt Regency Budapest Hungary 353 25,323,000 72,000 Pannonia Hotels Malev Hungarian Airlines 2001 Royal Marine Hotel Dublin Ireland 103 28,802,000 280,000 William Neville & Sons Ltd Ryan Hotels 2001 Limerick Inn Limerick Ireland 154 9,875,000 64,000 Knox Hotels Ryan Hotels 2001 Caruso Belvedere Hotel Ravello Italy 24 31,200,000 1,300,000 Orient Express Hotels n/a 2001 Inter-Continental Warsaw Poland 406 174,759,000 430,000 Six Continents / Warimpex Finanz / UBM Vienna n/a 2001 Neptuno Hotel Algarve, Monte Gordo Portugal 335 12,675,000 38,000 Portuguese Business Group Sosul 2001 Nevskyj Palace St Petersburg Russia 282 168,818,000 599,000 Corinthia Hotels International St Petersburg City government 2001 La Nina Adeje Spain 232 36,000,000 155,000 Globalia Hotels Amrey 2001 Playa Hotel Barcelona Spain 215 45,000,000 209,000 Playa Hoteles n/a 2001 Hotel Gravina Barcelona Spain 85 9,015,000 106,000 Group H10 n/a 2001 Hotel Arts Barcelona Spain 482 285,000,000 591,000 Deutsche Bank Private Equity/Patron Capital Partners Sogo Co/HOVISA 2001 Apartotel Dorado Beach Canaries Spain 195 18,030,000 92,000 Bull Hotels n/a 2001 Hotel Costa Lago Costa del Sol Spain 204 18,030,000 88,000 Riu Hotels n/a 2001 Hotel Ses Estaques Ibiza Spain 159 14,000,000 88,000 Catalonia Ses Estaques 2001 Hotel Mindanao Madrid Spain 281 45,000,000 160,000 Bancor Pastor Hotel Mindanao 2001 Villa Magna Hotel Madrid Spain 182 80,000,000 440,000 Queiroz Pereira Shirayama 2001 Hotel Helios Salou Spain 216 10,000,000 46,000 Sara Hoteles n/a 2001 Hotel Peregrino Santiago de Compostela Spain 179 10,217,000 57,000 Private Individual n/a 2001 Porta Coeli Hotel Seville Spain 244 18,030,000 74,000 Hesperia Hoteles Occidental Hotels 2001 Hotel Samil Vigo Spain 137 9,000,000 66,000 Hot Lao Garriga Inm Samil 2001 Scandic Hotel Linkoping Sweden 220 15,477,000 70,000 City Financing A/S NCC Group 2001 Mr Chip Hotel Stockholm, Kista Sweden 150 13,421,000 89,000 Pandox AB Private Individual 2001 Stockholm Plaza Stockholm Sweden 151 20,347,000 135,000 SSRS Holding Skandia Life Insurance 2001 Scandic Hotel Malmen Stockholm Sweden 328 29,547,000 90,000 Capona AB Nordisk Renting 2001 Noga Hilton Geneva Switzerland 410 188,496,000 460,000 UBS/BNP Paribas Ogan Family 2001 Swan Diplomat Hotel Berkshire UK 46 9,875,000 215,000 Nike Group Hotell Diplomat AB 2001 Crowne Plaza (Project) Birmingham UK 242 39,428,000 163,000 Six Continents David Mclean Developments 2001 Chamberlain Tower Hotel Birmingham UK 695 66,171,000 95,000 Jurys Doyle Hotels Chamberlain Hotel Group 2001 Chamberlain Park Hotel Birmingham UKAs Chamberlain Tower Hotel Jurys Doyle Hotels Chamberlain Hotel Group 2001 Chamberlain Park Hotel Birmingham UK 250 13,578,000 54,000 Cockpit Hotels Jurys Doyle Hotels 2001 Cedar Court Hotel Bradford UK 131 23,609,000 180,000 Tweed Investments Acropolis hotels (Sirdar Estates) 2001 Burstin Hotel Folkestone UK 481 18,894,000 39,000 Grand Hotel Group Leisure Great Britain 2001 Four Seasons Hampshire (Project) Hampshire UK 120 12,633,000 105,000 Rochamel Construction Systems/Four Seasons Union Holdings 2001 Sundridge Park Kent, Bromley UK 151 24,687,000 163,000 Tweed Investments PA Consulting Group 2001 Holiday Inn Express Leeds Leeds UK 112 11,592,000 104,000 Standard Life Investments Ltd Premier Hotels 2001 Holiday Inn Express Albert Dock Liverpool UK 117 8,978,000 77,000 Centre Island EHI Development 2001 Kensington Hotel London UK 226 50,385,000 223,000 Lancaster Landmark Hotel Group n/a 2001 Cumberland Hotel London UK 894 238,308,000 267,000 Nomura Principal Finance Compass Group 2001 Albany Hotel London UK 79 8,231,000 104,000 Private Individual Kuwaiti Algerian 2001 Berners Hotel London UK 216 83,908,000 388,000 JJW Hotels & Resorts SAIF Inc. 2001 Holiday Inn Heathrow London, Heathrow UK 230 50,385,000 219,000 Standard Life Investment Funds BDL Hotels 2001 Heathrow Park Hotel London, Heathrow UK 309 22,063,000 71,000 Private Company Equitable Life Assurance Society 2001 Kensington Edwardian Hotel London UK 69 12,339,000 179,000 Private Individual Kuwaiti Algerian Investment Co 2001 Knightsbridge Hotel London UK 50 14,807,000 296,000 Firmdale Hotels n/a 2001 Hotel Europe London UK 100 15,630,000 156,000 Private Individual n/a 2001 Radisson SAS Manchester Airport Manchester UK 360 61,697,000 171,000 n/a Radisson SAS - Rezidor HVS International

Sales Price per Sale Date Property City Country Rooms Sales Price Euro Room Euro Buyer Seller 2001 Prince of Wales Merseyside UK 103 7,578,000 74,000 Britannia Hotels Paramount Hotels 2001 Dunchurch Conference Centre Rugby UK 79 8,896,000 113,000 First! Venues Ltd Jarvis Hotels/Marconi 2001 Buchanan Arms Hotel Stirlingshire UK 52 28,152,000 541,000 Stonefield Castle Group Paramount Hotels 2001 Hilton Stoke on Trent Stoke UK 136 8,229,000 61,000 Prince Hotel Group Hilton International 2001 Park Royal International Hotel Warrington, Cheshire UK 142 35,373,000 249,000 Tweed Investments Mossley 2001 Bishopstrow House Hotel Warminster, Wiltshire UK 33 8,089,000 245,000 Von Essen Hotels Simon Lowe & co investors 2001 Hilton Edinburgh Belford Edinburgh UK 378 44,025,000 116,000 Menzies Hotels Hilton International 2001 Hilton Newcastle Newcastle UK n Edinburgh Above Menzies Hotels Hilton International 2001 Hilton Bath Waterside Bath UK n Edinburgh Above Menzies Hotels Hilton International 2000 Hotel Amigo Brussels Belgium 183 25,856,000 141,000 RF Hotels Blaton Family 2000 Sol Las Olas Fuerteventura Canary Islands 200 11,840,000 59,000 Sara Hoteles Sol Melia 2000 Renaissance Hotel Prague Czech Republic 314 64,800,000 206,000 Hospitality Europe BV Gestin AS 2000 Hotel Rivoli Espoo Finland 206 15,979,000 78,000 Hotelman Oy Nordisk Renting with Radisson SAS 2000 Ramada Hotel President Helsinki Finland 495 36,331,000 73,000 Elanto Finnish Insurers 2000 Abela Hotel Monaco France 192 32,840,000 171,000 Columbus Hotels Abela Hotels 2000 Holiday Inn Nice France 131 10,866,000 83,000 City Hotels Belgium n/a 2000 Hotel de la Tremoille Paris France 111 22,988,000 207,000 Scotsman Hotels Highgate Holdings 2000 Hyatt Regency Charles de Gaulles Paris France 388 50,292,000 130,000 Hospitality Europe BV TOA Invest France SARL 2000 Balzac Hotel Paris France 107 45,720,000 427,000 Pacific Investments Abela family 2000 Hotel de Vigny Paris France Balzac Hotel Pacific Investments Abela family 2000 Four Seasons Berlin Germany 202 86,359,000 428,000 HGA Fund n/a 2000 Inter-Continental Berlin Germany 510 141,000,000 276,000 DIFA Fund n/a 2000 Best Western Stuttgarter Hof Berlin Germany 105 10,731,000 102,000 n/a n/a 2000 Steigenberger Venusberg Bonn Germany 85 9,249,000 109,000 Dr Ebertz & Partner n/a 2000 Best Western Hotel Eden Dusseldorf Germany 120 12,775,000 106,000 Golden Tulip (Krasnapolski) Gainstride 2000 Radisson SAS Düsseldorf Dusseldorf Germany 309 35,400,000 115,000 Memphis Group SAS International Hotels 2000 Renaissance Hotel Dusseldorf Germany 245 45,990,000 188,000 BFG Immoinvest n/a 2000 Mercure Seestern (Project) Dusseldorf Germany 160 16,352,000 102,000 DESPA Fund NCC Real Estate 2000 Hilton Düsseldorf Dusseldorf Germany 372 47,523,000 128,000 Hilton International n/a 2000 Kempinski Gravenbruch Frankfurt Germany 285 28,105,000 99,000 Private Consortium Kempinski Hotels & Resorts 2000 Marriott Hotel Hamburg Germany 277 45,479,000 164,000 Strategic Hotel Capital Goteborg, Bilia AB 2000 Kempinski Hotel Atlantic Hamburg Germany 254 35,770,000 141,000 Private Consortium Kempinski Hotels & Resorts 2000 Euro Garden Köln Cologne Germany 85 8,176,000 96,000 Westmont Hospitality National Investment Company 2000 Euro Plaza Köln Cologne Germany 116 9,709,000 84,000 Westmont Hospitality National Investment Company 2000 Kempinski Hotel Fürstenhof Leipzig Germany 92 14,308,000 156,000 Schoerghuber Group Hypo Vereinsbank 2000 Arabella Sheraton Offenbach Germany 221 29,638,000 134,000 Private Individual n/a 2000 Hotel Vierjahreszeiten Regensburg Germany 225 11,498,000 51,000 NH Hoteles n/a 2000 Binshof Therme & Resort Speyer Germany 88 8,585,000 98,000 Lindner Hotels Mannheimer Sparkase 2000 Kempinski Hotel Elefant Weimar Germany 102 13,286,000 130,000 Schoerghuber Group Hypo Vereinsbank 2000 Fitzpatrick Silver Spring Hotel Cork Ireland 110 17,776,000 162,000 Moran Group Fitzpatrick Hotel Group 2000 Blooms Hotel Dublin Ireland 86 22,140,000 257,000 Martin Keane Private Individuals 2000 Holiday Inn Dublin Ireland 92 8,507,000 92,000 Consortium (KPMG Partners) Receivers 2000 Grand Hotel Baglioni Florence Italy 169 20,660,000 122,000 Star Hotels Private Individual 2000 Radisson SAS Hotel Schiphol Amsterdam Netherlands 279 47,636,000 171,000 Miller Global Tencourts Leisure Investments 2000 Hotel des Indes The Hague Netherlands 76 20,000,000 263,000 Berange Holding Private Individual 2000 Radisson SAS Plaza Oslo Norway 693 30,828,000 44,000 Kommunal Landspenjonkasse (Pension institution) SAS International Hotels 2000 Playa Capricho Almeria Spain 331 19,232,000 58,000 Bami Playa Hoteles 2000 Costa del Sol Estepona Spain 170 24,942,000 147,000 n/a n/a 2000 Oasis Hotel Ibiza Spain 178 10,217,000 57,000 Grupotel Oasis Playa 2000 Club Delfin Ibiza Spain 228 18,030,000 79,000 n/a n/a 2000 Costa Salinas / Lanzarote Garden La Palma / Lanzarote Spain 379 66,110,000 174,000 H10 Hotels Grupo Lutz 2000 Playa Blanca Lanzarote Spain 190 24,040,000 127,000 Riu Hotels n/a HVS International

Sales Price per Sale Date Property City Country Rooms Sales Price Euro Room Euro Buyer Seller 2000 Alameda Madrid Spain 145 13,943,000 96,000 Tryp Hoteles Grupo Barajas 2000 Barajas Madrid Spain 230 22,117,000 96,000 Tryp Hoteles Grupo Barajas 2000 Tryp Fenix Hotel Madrid Spain 444 75,125,000 169,000 Sol Melia Tryp Hoteles 2000 Costa Azul Malaga Spain 312 36,060,000 116,000 Playa Hoteles Bagels Hunan 2000 Bellevue Hotel Mallorca Spain 1474 102,921,000 70,000 Airtours Banesto Corporation 2000 Sol Inn Bardinos Mallorca Spain 215 8,414,000 39,000 Arenales de Las Palmas Sol Melià 2000 Scandic Star Hotel Stockholm Sweden 269 11,529,000 43,000 Pandox JM AB 2000 Strandbaden Elite Hotel Falkenberg Sweden 135 8,260,000 61,000 SSRS Holding Wihlborgs Fastighets 2000 Quality Hotel Globe Stockholm Sweden 287 35,046,000 122,000 Fastighets AB Stockholm Arenan 1 Balder 2000 Ston Easton Park Bath UK 22 8,226,000 374,000 Von Essen Hotels Private Individual 2000 Marygreen Manor Hotel Brentwood UK 55 12,300,000 224,000 Pantheon Hotels & Leisure Paul Pearson 2000 Thornbury Castle Bristol UK 20 8,200,000 410,000 Von Essen Hotels Private Individual 2000 Caledonian Hotel Edinburgh UK 249 72,406,000 291,000 Hilton International Queens Moat Houses 2000 Posthouse Hotel Erskine UK 177 12,300,000 69,000 Cosmopolitan Hotels Granada 2000 Burstin Hotel Folkestone UK 481 19,680,000 41,000 Grand Hotel Group Queensborough Holdings 2000 Howard Johnson Hotel Glasgow UK 114 9,348,000 82,000 Sydney & London Properties Premier Hotels 2000 Master Robert Hounslow UK 94 10,988,000 117,000 Hillport Limited Fuller Smith & Turner 2000 Beaufort London UK 28 10,824,000 387,000 Private Individual Private Individual 2000 Cavendish Hotel London UK 251 98,400,000 392,000 De Vere Hotels Granada 2000 Conrad London London UK 160 96,760,000 605,000 Consortium of Property Investors Peninsular & Oriental Steam 2000 De Vere London UK 100 41,000,000 410,000 Private Individual Cola Holdings 2000 Dorset Square Hotel London UK 38 11,480,000 302,000 Bank Kuwait Firmdale Hotels 2000 Grand Plaza Hotel London UK 301 41,000,000 136,000 Crown Dilmun plc Romahaven Ltd 2000 Hilton St Ermins London UK 290 90,200,000 311,000 Jolly Hotels Strategic Hotel Capital 2000 Howard Hotel London UK 139 65,600,000 472,000 Marylebone Warwick Balfour Barclay Brothers 2000 Dominion Serviced Apartments Manchester UK 115 14,760,000 128,000 Crown Dilmun plc n/a 2000 Hellidon Lakes Hotel Northamptonshire UK 71 19,680,000 277,000 Marston Hotels Private Individual 2000 Oxford Moat House Oxford UK 155 18,450,000 119,000 Paramount Hotel Group Queens Moat Houses 2000 Reigate Manor Reigate UK 50 7,790,000 156,000 Private Individual n/a HVS International - Offices & Divisions

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