Mandarin Oriental is expanding its wholly-owned
hotel in Munich through the construction of a mixed use complex on
an adjacent site.
The group has entered into an agreement
with the project developer Wöhr + Bauer Projekt HTW GmbH & Co. KG
and its parent entity Wöhr + Bauer GmbH to construct new hotel
rooms and facilities as part of the mixed use complex estimated to
open in 2021.
The group’s total investment in the
project, which will also include a refurbishment of the existing
hotel’s 73 rooms, is estimated at €124 million (US$170 million),
in today’s terms.
The site will be developed into a mixed use
complex of some 23,000 sq. m. comprising two buildings that will
jointly house new hotel rooms and facilities, 19 luxury branded Residences at Mandarin Oriental, retail units, commercial offices
and underground car parking.
One of the new buildings, housing the
hotel rooms and facilities as well as six of the 19 Residences at
Mandarin Oriental and approximately 800 sq. m. of retail, will be
connected to the existing hotel via an underground tunnel.
Mandarin Oriental will own 100% of the freehold interest in
the land and buildings of the new hotel annex, comprising 51
additional guestrooms (increasing the total number of guestrooms
of the expanded hotel to 124), a restaurant and bar, a spa,
fitness centre and swimming pool, hotel back of house facilities
and ten underground car parking spaces.
Mandarin Oriental will
manage the expanded hotel, as well as brand and manage the
W+B will retain and manage 100% of the freehold
interest in the remaining land and buildings, comprising 19
Residences at Mandarin Oriental (until sold), a third party
operated restaurant, commercial offices, retail outlets and
underground car parking.
The site, which is currently a
multi-storey car park, was acquired by W+B from the City of Munich
in 2013. As a condition of the purchase of the car park, W+B are
required to develop and construct a replacement car park at
another location in the city prior to commencing redevelopment of
the site. As a result, construction of the complex is estimated to begin in 2018, with completion expected for late 2020.
Mandarin Oriental will pay the developer, W+B, a turnkey
construction price to build the new hotel rooms and facilities, a
portion of which will be subject to indexation. Mandarin Oriental
will provide technical services to the developer. Mandarin
Oriental’s financial commitment during the period 2014 to 2017 is
limited to development fees and land purchase price installments,
estimated at €17 million (US$23 million), with the final land
purchase price installment only due when construction on the site
commences. Refurbishment of the existing hotel rooms will be
undertaken during the construction period.
and enhanced hotel operations are currently estimated to generate
incremental EBITDA in 2023 (expected third year post opening) of
US$17 million, in today’s terms. Mandarin Oriental will fund the
estimated €17 million (US$23 million) of payments leading up to
the final land purchase price installment and commencement of
construction using existing cash reserves, with the remaining
investment to be funded through the use of an appropriate mix of external debt and cash reserves.
Edouard Ettedgui, Group
Chief Executive of Mandarin Oriental, said, “This project creates
a rare opportunity to expand one of Mandarin Oriental’s best
performing assets, and further strengthen Mandarin Oriental,
Munich’s market leading position in this strategically important
Wolfgang Roeck, Managing Partner of W+B,
added, “Our goal is to develop a vibrant destination, which
encompasses the best of Munich’s tradition and innovation in the
form of a new high quality mixed use development, designed to
appeal to the city’s residents and international visitors alike.
We are delighted to be partnering with Mandarin Oriental to create sought-after branded residences and to expand Munich’s most
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