hospitality Market News: Spanish Real Estate Intelligence

Torreblanca Golf Attracts Swedish, Belgian & Chinese Investors

18 October 2017 - El Periódico Mediterráneo

Swedish, Belgian and Chinese investment funds have all expressed an interest in developing the Doña Blanca Golf de Torreblanca project, whose foundations were initially approved again by the Town Hall (of Torreblanca) last Tuesday, during an extraordinary plenary session. The expectation is that the project will be awarded at the beginning of 2018 and may become a reality in 2022.

In fact, the government’s team says that even before launching the tender for the program, it already has half a dozen companies and investors on the table, who have registered their interest in the urban planning project. Three of them are backed by foreign capital.

In the opinion of the councillor responsible for Town Planning, Rosana Villanueva, that fact reflects the interest that the golf project has sparked. The plan is to maintain intact the characteristics of the initial program, created in 2005, and for the project to be put out for tender for around €58 million, which will represent a saving of €3.5 million with respect to the initial plan, which exceeded €61 million in total.

The PAI ('Programa de Actuación Integral' or Comprehensive Action Program) is considering extending the site by 1,910,254 m2, with 600,000 m2 allocated to the 18-hotel golf course and an urbanised area spanning 1,233,255 m2, with 4,410 homes, as well as hotels, tennis courts, a football pitch, shopping centres, 125,000 m2 of green space, a promenade and a coastal park measuring 80,000 m2. And the companies have expressed their interest in the complete development.

In fact, the PAI is one of the Town Hall’s priorities. That has been highlighted by the socialist mayor, Josefa Tena, since the beginning of her term and, now past the half-way point, she is continuing to back the golf course as a generator of employment and driver of tourism in the municipality. Its launch would represent one of the highest aspirations of the local government, “along the creation of employment”.

“Moreover, it would foster tourism and develop a coastal space with green, sustainable and controlled urbanism. Given its location and proximity to the airport “the seasonality of local tourism could be evened out; moreover, it will be the only beachfront golf course (in the country), which makes it a very attractive prospect indeed”, said the mayor.

The document to be presented to the plenary session will include an appendix with the foundations for the tender work for the construction firms, in order to speed up the process and ensure that the megaproject is given the green light as soon as possible.

Original story: El Periódico Mediterráneo (by Merche Martinavarro)

Translation: Carmel Drake

 
The Ruggieri Family Buys Eurosic's Spanish Socimi

18 October 2017 - El Confidencial

One of the wealthiest families in France has set its sights on Spain’s tourism market. The Ruggieri family, owner of the Batipart Group, reached an agreement in August with the also French firm Eurosic to purchase the Socimi that that firm had created in Spain, and has now renamed the entity Elaia Investment Spain.

After taking over 66% of the vehicle, Batipart has put all of the wheels in motion to enable the company to make its debut on the stock market before the end of the year, just like its previous owner had planned.

In this new business venture, Ruggieri is accompanied by Euler Hermès, owner of 13.81% of the Socimi; Allianz Invest Pierra, owner of another 9.21%; and around twenty individual investors who own the remainder of the share capital.

Elaia owns twelve real estate assets in Spain, primarily hotels and tourist apartments, although it also owns two residential properties in Madrid, on the centric streets Bailén and Atocha.

The Socimi focuses on three-and four-star category hotels and on taking advantage of the boom in tourist apartments. It owns two assets of each type in Mallorca and a hotel and two apartment blocks in Málaga, whilst, in Cataluña, it owns a hotel in Roses (Gerona), one tourist rental building in Barcelona and another in Estartir (Gerona).

In total, the Socimi has invested €145 million so far acquiring its portfolio, although its objective is to reach €280 million. To that end, it is currently holding talks with various investors, whose contributions will range between €10 million and €30 million.

When it debuts on the MAB, Elaia expects to have a market capitalisation of €120 million, a figure that will make it one of the largest Socimis on the market. The company will be managed by Elaia Management Spain, a subsidiary of Batipart, and the plan is to undertake some of its expansion together with Pierre & Vacances, its main partner in Spain.

The Socimi’s roadmap foresees it continuing with its intense asset acquisition policy for the next year or so, before spending the following two years repositioning those assets. The divestment phase is expected to be activated from 2021 onwards and that strategy is expected to be carried out on an asset by asset basis, culminating in 2024, with a forecast rate of return (IRR) of 15%.

Eurosic-Gecina’s heritage

The Batipart Group was founded in 1988 by Charles Ruggieri, who was born in Italy but who settled in France many years ago, where he is one of the top 100 wealthiest people in the country, with a net worth of around €900 million. A historical shareholder of Eurosic, in June, he agreed to sell his 24% in the real estate company to Gecina, in exchange for taking ownership of all of the leisure, health and hotel assets in the portfolio, including Elaia, worth €463 million in total.

That agreement was signed on 29 August, which is when Batipart took control of the Spanish Socimi. Moreover, the group owned by the Ruggieri family also has a presence in the nursing home sector, through the Korian Group, and it owns six hotels in Africa.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

 
Blackstone To Merge Popular & Sabadell's Hotels To Create Tourism Giant

18 October 2017 - El Confidencial

Blackstone has surprised the market once again with the purchase of the hotel company HI Partners from Banco Sabadell for €630.7 million; the operation will turn the fund into one of the major players in the Spanish tourism sector overnight. Nevertheless, this acquisition is actually just the tip of the iceberg of a much larger objective, which is directly linked to the largest real estate operation seen in Europe in recent times: the €30,000 million in toxic assets that Blackstone acquired from Santander-Popular in the summer.

That huge portfolio, comprising foreclosed properties and non-performing loans, contained €800 million linked to hotel assets, some of which Blackstone wants to use to fatten up HI Partners' portfolio, according to sources in the know. Those same sources define that move as a medium-term strategy, which will allow it to create a hotel giant, capable of competing with other large platforms such as Hispania, before debuting it on the stock market in a few years time.

Although the fund analysed its purchase of Sabadell hotels as a stand-alone operation, Blackstone’s roadmap forecasts the possible generation of synergies with its other large portfolio of hotel assets in Spain, in other words, those proceeding from Banco Popular.

As El Confidencial published, when Blackstone definitively closed the purchase of 51% of the Santander-Popular portfolio, the fund’s objective was to gradually divide it up, taking advantage of the range of vehicles that it already owns in Spain, such as the Socimis Fidere, Albirana and Corona Patrimonial, and undertake direct sales of both assets and debt portfolios.

HI Partners now forms part of that same strategy. The plan is to transfer only those hotels that comply with the group’s business model, which focuses on high category coastal hotels and very selective urban establishments. The Hilton Inn Sevilla, Gran Hotel La Toja in Pontevedra, Tamisa Golf in Mijas and Hotel Ayre in Oviedo are some of the assets that were held under the Popular umbrella.

Nevertheless, given that the bulk of this portfolio is debt whose collateral are these establishments, the transfer of the assets chosen to form part of HI Partners will have to be performed gradually, on an asset by asset basis, depending on the progress of the negotiations regarding the loan status in each case. Blackstone has time on its side since its objective with these acquisitions is to take advantage of the growth curve of the Spanish tourism sector and to do so through an asset repositioning strategy.

Management team

After selling HI Partners, along with its 14 best establishments, Sabadell will now continue with more than a dozen lower category hotels under its umbrella, which it plans to transfer gradually. All of the bank's debt secured by hotel collateral also remained inside its perimeter for the time being; until now that was being managed by the team led by Alejandro Hernández-Puértolas and Santiago Fisas, and it will probably end up being sold off through Solvia.

The HI Partners management team will continue to be linked to the hotel group even after the completion of the sale to Blackstone, once the operation has received the green light from the Competition authorities. The team will face the challenge of continuing to make the company grow by repositioning the hotels, like they have been doing since 2015, in line with Blackstone’s plans for Popular’s establishments.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake