PCI targets its investments in under-performing assets which are located in touristic and commercially attractive locations . These markets offer favorable fundamentals that will support profit and growth in the foreseeable future. PCI’s portfolio is located in attractive tourism and business locations such as Berlin, Munich, Hamburg, Frankfurt, Dresden, Düsseldorf, Mannheim and Leipzig. PCI benefits from its existing business platform, its reliable practices and its skilled personnel in order to continue performing strongly and to further growing its portfolio. The Company also trusts that the business environment will provide abundant acquisition opportunities in the attractive markets it targets, to support its growth strategy in the medium to long term.
PCI positions itself as an expert for optimizing the value chain - starting from the acquisition stage, whereby it benefits from strong connections to deal sources, through forming the most advantageous management and operation structure for each hotel asset individually.
The Company has established a strong deal sourcing network, based on over 12 years’ experience and the reputation of being a reliable deal maker. The sourcing network includes banks, investment funds and other real estate companies seeking to divest from their portfolio mismanaged and poorly performing hotels. Over the years of activity in the market, PCI has positioned itself as a preferred buyer, resulting in a vivid and diverse deal flow of off-market deals. PCI has accomplished the ability to identify and cherry-pick the properties with the highest long term value potential in the market.
For its acquisitions PCI is applying the following specific criteria structure:
- Low acquisition price
- Significant upside potential
- High cash flow generation
- Repositioning potential
- Branding opportunities
After the Company selects an attractive property for acquisition, it measures the long term value potential and the opportunity of synergy effects within the portfolio. During the due diligence process, the team examines carefully and thoroughly the financial, commercial and legal aspects of the deal. Once the deal is approved, PCI is able to execute rapidly and smoothly.
After the takeover stage, the Company repositions the asset, by fitting each property with a detailed tailor-made business plan for each individual asset. PCI has a strong expertise in modernization application and optimal brand re-positioning. Thus the turnaround process starts with selecting the ideal market position such as the brand and star category, in view of a comprehensive demand and supply analysis of the specific location. The turnaround includes targeted capex and refurbishment activities, which on one hand support implementation of the repositioning plan and on the other hand enables reduction of non-recoverable costs in the future.
During the renovation phase, PCI integrates the asset into its network with advanced in-house proprietary IT and marketing systems, which were developed to adapt to any asset’s specific needs. The unique platform is a deciding component in enabling the tenant to exceed market averages in cost savings, revenue generation and thus profitability.
The turnaround process is achieved through the access of synergies from extensive accumulated experience and market knowledge with regards to high-potential mismanaged properties, which is PCI’s most unique sustainable competitive advantage.
After the repositioning process is completed and repositioning of the property has been achieved, PCI leases out the hotel to external partners. The hotel operators are carefully selected according to their capabilities and track record, and PCI customarily cooperates with stable and experienced operators.
An integral component of the business plan is a long term fixed rental lease which increases the cash flow visibility and decreases the dependency on the operational business.
PCI keeps supporting the operator with cost saving measures, mainly derived from the economy of scale benefits and bargaining power of the Company.
The Company’s abilities enable it to crystalize value in hotel assets by achieving the optimal positioning based on proprietary market intelligence.
The Company will hold onto properties where it believes it can create more value with further asset management activities. Once the property has been stabilized, PCI has the ability to hold an asset as a “cash cow” and benefit from a stabilized high yield.
Business Model Overview
PCI targets investments in under-performing assets which are located in touristic and commerically attractive locations in Germany.
PCI's area of expertise focuses on responding to the growing demand for hotels of 3 to 4 star categories.
PCI invests in non-performing hotel loans, distressed assets and selected development opportunities in high tourist destinations in Germany and Europe.