An investment announced from IFC, Proparco, and MIGA to Kasada Hospitality Fund LP will inject new life into a 206-room hotel in Nairobi, Kenya, with green and sustainable building practices and renovations, supporting the city's important hospitality sector.
Kasada will use the financing package to refurbish, modernize, and expand the former Crowne Plaza in Nairobi's Upper Hill, a business district that hosts embassies, international organizations, and the headquarters of some of East Africa's largest corporations.
Following this revamp, the property will re-open as a dual branded Pullman & Mercure property and include a state-of-the-art co-working space under the brand WOJO, which will cater to a growing demand in the market for more flexible workspaces.
The $49.5 million financing package to Kasada includes an $11 million loan from IFC, an $11 million parallel loan from development finance institution Proparco, and a $27.5 million guarantee from MIGA, a member of the World Bank Group that offers political risk insurance guarantees to private sector investors and lenders.
The travel and tourism sector accounts for an estimated 9 percent of Kenya's GDP, with Nairobi contributing a significant portion due to its status as a commercial center within Eastern Africa and a hub for many regional and global organizations. Demand from corporations is a key driving factor behind the hotel market. The Pullman & Mercure Upper Hill hotel is well placed to cater to this demand.
The hotel aims to become EDGE certified, an innovation from IFC that helps clients reduce their environmental footprint by using more environmentally friendly building materials and less water and energy.
"We look forward to bringing our multi-disciplinary expertise in creating value and impact with this hotel and aim to reposition it to attract more international travelers as well as the place to be for the local community. This asset is about to enter a new life cycle and contribute to the revitalization of the Kenyan hospitality sector post the COVID-19 pandemic," said Olivier Granet, Kasada's Managing Partner and CEO, and David Damiba, Kasada's Managing Partner and Chief Investment Officer.
"IFC invests in the hotel and tourism industry because it is a major contributor to employment, foreign exchange earnings, and tax revenues. IFC's partnership with Kasada is supporting the development of a strong and resilient hospitality sector across key markets in Africa," said Henrik Elschner Pedersen, IFC Regional Industry Director in Africa for Manufacturing, Agribusiness, and Services.
"Tourism is vital for developing economies, helping support employment, strengthening supply chains, and bringing in foreign exchange. MIGA's partnership with Kasada contributes to the current recovery of the tourism and hospitality sector from the impact of COVID-19 across Sub-Saharan Africa," said Muhamet Bamba Fall, MIGA's Director of Operations.
The financing is part of a broader partnership announced in July 2021 between the Kasada Hospitality Fund and IFC, where IFC committed to invest up to $160 million in Kasada's fund to help the fund build a strong and resilient hotel portfolio across sub-Saharan Africa as the industry recovers from the effects of the COVID-19 pandemic on tourism and business travel.
The MIGA guarantees are part of a master contract issued by MIGA in 2021 to cover the Kasada Hospitality Fund's equity investments in the redevelopment and construction of hotels in Sub-Saharan Africa. The guarantees provide coverage against the risks of transfer restriction, expropriation, and war and civil disturbance for up to 15 years. To date, MIGA has issued guarantees for 10 hotel projects under the master contract, for a total of about $130 million.