Berlin, 5 October 2023
The serviced apartment brand SMARTments is celebrating its 10th anniversary and intensifying its expansion. After the first property opened in Hamburg near the Außenalster in 2013, the portfolio of project developer GBI Group currently comprises eight properties in operation in Germany and Austria with 1043 units. Today at the Expo Real, another location decision is announced for Bielefeld with 223 units directly at the main railway station, which means that four serviced apartment buildings are under construction. The house in Bielefeld will open in 2025. "Overall, we’re planning to double the portfolio by 2027," announces Burak Ünver, managing director of SMARTments business.
For Reiner Nittka, CEO of the GBI Group, the success story of the serviced apartments shows how right the decision was to expand the range of real estate developments and to take over the operation of the properties: "At that time, this type of long-stay accommodation was hardly known in Germany. But intuition and market research were right. Since then, the influx of guests to the properties has been steadily increasing. Even Corona and periods of economic weakness have only caused minor dents, especially compared to the classic hotel industry," says Nittka. In 2022, a record operating profit was achieved with an occupancy rate of more than 80 per cent, although Corona restrictions still had to be observed in some cases. "Currently, we are increasing our average daily rate (ADR) by more than 20 percent compared to the previous year,” Burak Ünver cites the latest figures. These apply to the three SMARTments business in Berlin, the two houses in Vienna as well as the other locations in Hamburg, Munich and Mannheim. Ünver: "Thanks to these good results, we are also well over budget for 2023."
In the accelerated expansion, SMARTments will increasingly rely on the takeover of existing houses and portfolios, both of classic hotels and other long-stay accommodation, in addition to its own developments of the GBI Group. Pure lease agreements with other project developers and portfolio holders are also possible," Ünver explains: "This multi-expansion strategy is a reaction to the changed market situation. We are in an excellent position for the new challenges and are also specifically adapting our structures for this."
Two of the four serviced apartment buildings under construction are also part of the diversification of the product range recently announced by SMARTments. In addition to classic SMARTments business, where kitchenettes are integrated in every flat, the serviced flat offer will also include SMARTments connect in the future. In the new SMARTments connect offer, shared kitchens are planned for some of the apartments, supplemented by opportunities for co-working and co-living. In the newly announced building in Bielefeld, 67 of the 223 units will be built without their own kitchen. With this, we are primarily addressing young professionals," says Ünver. This group of guests has a special need to meet people in an uncomplicated way after returning to their accommodation, even when travelling for work, without having to give up a private retreat there. "In this way, a community is created that makes it easier to settle in a new city," says Ünver. In Bielefeld, a photovoltaic system is used to generate its own electricity. This sustainability made certification according to the KfW 40 standard possible.
GBI CEO Reiner Nittka also points to the importance of the financially strong private real estate fund manager Henderson Park as a new shareholder of the group of companies in the expansion strategy. Mixed-use properties will also gain in importance. "In these developments, serviced apartments are combined with other types of use, often from the SMARTments family," says Ünver.
The significant expansion of SMARTments business and SMARTments connect will also be interesting for investors. In the past, Hanse Merkur Grundvermögen, Württembergische Lebensversicherung, the fund company Catella, a professional pension fund and a private equity company invested in the product. The SMARTments connect and SMARTments business in Frankfurt, which are currently under construction, were acquired by abrdn Investments Deutschland AG (abrdn) and Hanse Merkur Grundvermögen. "Institutional investors are focusing on the serviced apartments not only because of the long-term leases and rental agreements, but also because of the successful balance sheet," says Burak Ünver. "Accordingly, our owners have never had to record rent defaults, and lease payments have always been made without restrictions."