Amaranten: a flower worth picking? - a case study on NREP's SEK 1.5 billion acquisition of Hotel Amaranten in the midst of a global pandemic

Sammanfattning: The thesis analyses the underlying rationales behind the decision of the Real Estate Private Equity firm NREP to acquire Amaranten from Nordic Choice Hotels and the market environment under which the acquisition took place. The Swedish hotel market has during the last decade experienced a record strong growth, and all-time high occupancy rates. However, following the Covid-19 pandemic the future market development remains uncertain. Through a single case study, we investigate the direct and indirect factors contributing to the decision before conducting a valuation of the property. We find largely contributing factors being the possibility for NREP to enter a new segment combined with the uniqueness of the asset. Moreover, the hotel asset can be converted to an office further mitigating the risk of the acquisition in the case of sustained market uncertainty. Lastly a valuation of the asset is conducted resulting in a purchase value of SEK 1.48 billion and an IRR of 18%, as such justifying the quoted purchase price of SEK 1.5 billion and the fund's target IRR of 17%.