January 2017 has been a particularly busy month in Ghana so far, and the recent announcement of a transaction involving the Mövenpick Accra has added to the activity. The sale of the 260-room Mövenpick Ambassador Hotel, which opened in 2011, is the largest open-market hotel transaction in sub-Saharan Africa to date.
Kingdom Holding Company (KHC), the Saudi-based firm chaired by Saudi Prince Al-Waleed bin Talal, announced the sale of its 100% ownership interest in the property to QG Africa Hotel LP, a Mauritius-based investment fund that is managed by Quantum Global Africa Investments Management Ltd. The hotel sold for US$100m, approximately at a value of US$385,000 per room, and the deal closed on December 28, 2016. As remarked by Prince Al-Waleed, the transaction “marks yet another success for KHC’s value realization strategy from growth market investments.” KHC also has an ownership stake in Mövenpick, which will continue to brand and operate the hotel.
Following on the high profile 2016 transaction of the InterContinental Hotel Lusaka, this recent acquisition by QG advances the fund’s expansion plans in Africa and its contributions to the continued growth of the continent’s hospitality sector, despite the short term challenges faced by some of the continent’s major markets. As commented by the QG Group’s CEO, Jean-Claude Bastos de Morais, the acquisition “…is a great testament to the strength of our Hotel Fund and its growing portfolio. The hospitality industry across Africa is an indicator of the vitality and attractiveness of key locations across the continent and we look to further take advantage of those opportunities and generate value added returns for our investors.”
An Overview of Hotel Real Estate in Sub-Saharan Africa, released by JLL in October 2016 reported a continued positive long-term outlook despite economic challenges faced in many regional markets. The report also forecasted an estimated US$1.7b will be invested in hotels in sub-Saharan Africa in 2017, growing to US$1.9b in 2018, with increased efficiency in the supply pipeline and more projects being realized. Although hotel development will be the primary way to increase investment in the sector, more investors are also considering acquisitions as a way to grow investment. The existing challenges of hotel development on the continent – availability or raw materials, finding skilled contractors, keeping to a timeline and budget – are apparent to investors.
KHC has many prominent hospitality investments. Along with a 33% ownership stake in Mövenpick Hotels & Resorts, the company also owns 47.5% ownership interest in Four Seasons Hotels & Resorts and 5.8% interest in Accor Hotels. The company currently owns 20 properties in 15 countries across the world, plus two hotels under construction.
QG Africa Hotel LP is a US$500m investment vehicle which aims to capitalize on the emerging opportunities in the hospitality sector. The fund is a long-term direct equity investor in hotel projects across sub-Saharan Africa, including greenfield and brownfield operations. The investment activities include construction, conversions, acquisition and renovation of hotel projects across sub-Saharan Africa.