Montreal-based Jesta Group has sold a majority interest in distinctive Nhow Hotel Berlin in Germany to Swiss-based Eastern Property Holdings in a transaction which reaches into the investment sectors of a half-dozen different countries.
The deal was also completed in the midst of a worldwide pandemic.
“It’s one of those deals that takes a while,” said Jesta founder and president Elliott Aintabi in an exclusive interview with RENX, noting it took almost six months to complete. “And then you get hit with a pandemic along the way and then you have to deal with the situation.”
Aintabi told RENX the pandemic did not have a major impact on the transaction, although Jesta did “have to reduce the price a little bit, but not much in my opinion.” Financial details of the sale were not disclosed.
EPH purchased an 89.9 per cent interest in the property from Jesta and a partner.
Packham International Group of Toronto, in cooperation with Cavan Realty Ltd., of Ottawa, acted as advisors to EPH on the transaction. Michael Packham, the CEO of Packham International, told RENX both parties worked diligently to get the deal done.
“The parties were trying to look beyond COVID-19 and I really respected both sides for taking a long-term approach,” he said.
“There are many different companies that are taking a pause, at the very least, on transacting. I’m pleased and impressed with the parties that they looked beyond the crisis, got the deal done.”
The Nhow Hotel Berlin property
The Nhow Hotel (pronounced “N-how”) opened in 2010 and comprises approximately 217,000 square feet.
Focused on the arts industry, and particularly the music sector, the site includes 304 keys, 86 underground and 39 surface parking spaces, a spa, restaurant and two music studios.
“It’s quite a different hotel. It’s a music hotel,” said Aintabi, who grew up and spent much of his life in Montreal, but now lives in Monaco.
“People go in, they can play an electric guitar in the room and all the rooms are soundproof.
“There is a beautiful music studio you can rent on the top floor and it’s right along the river in Berlin.
“It’s extremely well-situated.”
Located in the popular Friedrichshain district of Berlin, the property is notable for its extraordinary, modern construction and waterside location. The award-winning architecture was designed by Berlin’s Sergei Tchoban.
NH Hotel Group, which operates the Nhow brand, is the third-largest business hotel group in Europe. It has 15 years remaining on the lease, with the option to extend by a further 10 years.
Eastern Property Holdings pursued site
Aintabi said the transaction came about because EPH approached his company — namely his son Eric at Jesta’s Montreal headquarters.
“My son told me to sell it, I didn’t want to sell it,” he said. “I like to keep assets for a long time and it was a new asset. But, the price they offered us was just too good for us to say no, so we carried on with the sale.”
Aintabi had purchased the Nhow Hotel in 2012.
“At the time, it was a little bit difficult market in Berlin,” Aintabi explained, noting the previous owner had been looking to dispose of the property.
“I’ll be frank with you, it was like a gift on the table. It had a very good lease with NH Hotels, we were happy with it, we bought it, and it did very well from there on.”
Packham has advised EPH on previous transactions and has a decade-long relationship with the firm, which is traded on the Swiss stock exchange.
“When we identified this property and the beneficial owner was a Canadian group, that was when it really just forged for me to advise,” he said. “It was actually really interesting.
“It’s a very international transaction. There were Canadians, Americans, Russians, Poles, a building in (Germany), people literally all over the map.
“And then when corona hit, it made signing fairly challenging. Across the EU, people couldn’t travel, lawyers working from home . . . ”
The transaction fits into both companies’ current investment strategies. EPH is diversifying its portfolio across major Western European markets.
Jesta Group “is my baby”
Jesta is generally a value-add investor, but Aintabi said that wasn’t the case with this asset.
“Jesta is my baby, it’s the acronym of my children’s initials,” Aintabi said of the privately held company, which currently operates in Canada, the U.S., Germany and France.
A McGill University grad, Aintabi is a chartered accountant by trade but he’s been involved in real estate since about 1980. Jesta was formed in 1993 and the headquarters has remained in Montreal despite its’ international reach.
“Jesta is a worldwide company, there is more outside (Canada) than inside,” he said. “We operate in opportunistic purchases. We add value and we create something else out of it.
“However in this case (Nhow Berlin), it was no add-value situation, it was just a smooth investment from the beginning.”
He moved to Europe in 2003, but Jesta remains very active in Canada.
Major development at Gare Viger
“We are presently developing a major asset in Quebec called Gare Viger. It will be a beautiful project when it’s done,” Aintabi said of the 1.2-million-square-foot mixed-use development being constructed adjacent to the historical hotel and commercial property.
“It will be just a gorgeous place. We are in the process of laying it out. With the old and the new, it is going to be a beautiful combination.
“It will become an Instagram shoot in Montreal.”
Jesta is also in the approvals stage for a 400,000-square-foot mixed-use development at Sherbrooke and Bleury in Montreal, “and we have a multitude of other projects there locally that are not on our website, but these are the two projects that we are developing in Montreal at this time.”
Aintabi said Montreal’s re-emergence as one of Canada’s real estate hot spots during the past couple of years is long overdue.
“Montreal was always a multicultural, beautiful city where you have all kinds of people from all kinds of backgrounds,” he said. “I love Montreal. Montreal made me Canadian.
“Suddenly it is receiving the attention of the rest of Canada and even the world because of its diversity and because of its pricing. It is still moving up in price.
“This is making Quebec boom.”