Category: Hospitality

Irea: Madrid Led Ranking For Hotel Investment In 2016 (€445M)

2 October 2017 – El Boletin

The strong outlook for tourism in Madrid is continuing to attract interest from investors, as shown by the fact that the Spanish capital was the largest focus for hotel investment in 2016, with a total volume of €445.3 million, according to the report “Five Keys Madrid vs Barcelona 2016 – 2017”, published by Irea.

Last year, Madrid recorded 13 transactions in total, the most notable of which involved the sale of Hotel Villa Magna to the Dogus Group. During the first half of 2017, the city of Madrid registered 6 hotel transactions, whereby doubling the number recorded in 2016, with a total volume of €312.9 million. By far the most significant operation in H1 2017 was the purchase of Edificio España by Riu Hotels, which is going to convert the property into a 650-room hotel in the heart of Madrid.

Meanwhile, Barcelona was relegated to third place in the hotel investment ranking in 2016, behind Madrid and the Canary Islands, but ahead of the Balearic Islands, with a hotel investment volume of €214.6 million. Six hotels were sold in the Catalan capital, containing 1,028 rooms in total.

Nevertheless, that investment figure represented a decrease of 38.8% with respect to the maximum reached in 2015, explained in large part by the price rise effect resulting from the hotel moratorium approved by the city’s Town Hall. The first half of 2017 was very active in terms of hotel transactions, with the sale of five hotels and a total investment of €230.2 million. The main transactions involved the purchase of 55% of Hilton Diagonal by AXA REIM (for a price per room of more than €300,000) and the acquisition of Silken Diagonal by Benson Elliot and Highgate.

Demand

Madrid also led the domestic ranking for the number of travellers last year and came second (after Barcelona) in terms of the number of overnight stays, with 9.0 million and 18.1 million, respectively. For another year, the Catalan capital was the leading destination in terms of overnight stays in 2016 (19.6 million); it received 7.5 million travellers, which represents an average stay of 2.6 days (vs. 2 days in Madrid).

The report highlights that in both markets, the behaviour of international demand has been excellent and it notes the growth of 10.2% in the case of Madrid during the first half of 2017, confirming the upwards trend driven by overseas tourists (…).

Supply

In terms of the hotel supply, Madrid recorded a total of 68,790 beds in the highest category (an almost identical figure to that of Barcelona) (…), with 5-star establishments accounting for 15% of the city’s hotel beds in 2016.

Although the statistical data do not reflect it yet, the recovery in the construction of new hotels in the capital is already evident – according to the report – and will be noted in the data for the coming years, given that short-medium term forecasts for Madrid indicate that more than 4,400 new hotel beds are going to available soon, led by major hotel chains and international investment funds, who are backing the city, given the strong outlook for its tourism sector (…).

Key indicators

The positive trend that Madrid has recorded in terms of demand, together with the stable evolution of its hotel supply, has led to the growth of operating results in recent years. The Spanish capital recorded an average RevPAR of €63.30 in 2016, up by 6.1% compared to 2015 and up by 32% compared to the minimum level recorded in 2013 (…).

Meanwhile, the profitability indicators for the hotel sector in Barcelona have also grown significantly in recent years. Revenue per available room experienced average annual growth of 2.3% during the period 2008-2016 (…). In 2016, RevPAR in Barcelona amounted to €95.90 (…) up by 5.2% compared to 2015.

Original story: El Boletin (by E. B.)

Translation: Carmel Drake

Carmena Scuppers AXA’s Plans For Cine Rex

27 September 2017 – El Confidencial

An urban planning setback for the real estate arm of the French insurance company AXA. The Town Hall of Madrid has scuppered the company’s plans to convert the former Cines Rex into a retail space, by declaring inadmissible both the modification to the Special Plan for the building located on Calle Gran Vía, number 43 Bis, as well as the Special Plan for Environmental Urban Planning Control for Uses of the property. The first of these instruments is used to process the change of use for buildings, whilst the latter is an urban planning instrument aimed at evaluating “the incidence that the implementation of a certain use may have on the urban environment and on the characteristics of the space that it inhabits, prior to the concession of the licence”, according to the Official Gazette of the Town Hall of Madrid.

It is worth remembering that the building has Level 1 protection, which means that the owner has an obligation to protect both the façade and the interior, and from therein arises the need to approve both urban planning procedures.

The Town Hall’s decision represents a major setback for the French insurance company, which reached an agreement to acquire the building that houses Hotel Rex and the historical cinemas of the same name for around €42 million at the end of 2015 (…).

AXA had planned to remodel the building, which has a surface area of 9,000 m2, and operate it by combining the hotel use – which it already held – with retail, the use that was reserved for cinemas, whose protected nature the insurance company was willing to respect, even though the space, measuring 700 m2, had been in disuse for several years. Sources at the company assure El Confidencial that “the project for the Rex building is going ahead as planned and on time. We are holding conversations with the Town Hall of Madrid to undertake certain modifications as part of the operations usually involved in these types of large projects” (…).

According to the sources consulted, the French insurance company had planned to convert the cinema into a large retail space to house a flagship store, in a similar style to Primark, a few doors along on the same street. In terms of the hotel side, Room Mate Hotels, the hotel chain owned by Kike Sarasola, reached an agreement with AXA at the beginning of this year to operate the iconic Hotel Rex. (…). The chain’s objective is to undertake a remodelling of the property, with the aim of inaugurating the new hotel, which will comprise 130 rooms and create 45 jobs, between the end of 2018 and the beginning of 2019 (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Catella: RE Inv’t Rose By 60% During First 8 Months To €7,061M

25 September 2017 – Expansión

The Spanish real estate market is still a magnet for investment at the global level. In this way, during the 8 months to August, investment in tertiary real estate assets (in other words, non-residential properties) rose to €7,061 million. That volume is 62% higher than the figure registered during the same period in 2016, according to data from the consultancy firm Catella (…).

By type of properties, commercial assets accounted for 45% of the total investment, with a volume of more than €3,200 million, up by 52% compared to the first eight months of 2016. In fact, that figure already exceeds the amount recorded for last year as a whole and is very close to the record investment made in 2007, when commercial assets worth more than €3,590 million were sold, according to sources at the consultancy firm.

Of that amount, investment in shopping centres accounted for 60% of total retail investment, amounting to €1,929 million. The figure is explained by the completion of major operations, such as the purchase of Xanadú, in Arroyomolinos (Madrid), on which Intu Properties spent €530 million; and the operation involving Nueva Condomina, in Murcia, which Klépierre purchased for €233 million.

Interest

Large assets were not the only retail assets to spark interest: high-street premises were also on investors’ radars. As such, €711 million was spent on that type of property between January and August, with highlights including operations such as the purchase of Preciados 9, the future flagship Pull & Bear store in the centre of Madrid, by Generali for €98 million. Meanwhile, investors spent another €516 million on retail parks and supermarkets, with the operation involving a portfolio of nine retail parks leading the way – the South African investor Vukile spent €193 million on that purchase.

In the case of offices, investment increased by 46% to reach €1,512 million. “The Boston portfolio – comprising 14 office buildings located in Barcelona, Madrid and Valencia – owned by BBVA and acquired by Oaktree for €180 million has been the most important transaction so far this year. In Madrid, the most significant transaction saw the acquisition of the Manoteras business park by Tristan Capital (€103 million), whilst, in Barcelona, the most high-profile deal has been the purchase of Torre Agbar by Merlin Properties (€142 million”, say sources at Catella.

During the first 8 months of 2017, hotel purchases rose by 25% to reach €1,760 million, thanks to operations such as the one involving Edificio España, for €272 million, as well as the purchase starring the international fund London & Regional (which acquired four hotels located on the coast and islands for €240 million), as well as others involving Starwood and KKR.

Moreover, the logistics sector has not been left behind in terms of the increase in investment. Between January and August, that segment saw investment grow by 31% to reach €575 million. (…). In this area, the most significant operation has been the sale of GreenOak’s portfolio to P3 Logistics Park for €243 million.

Whilst retail assets were the star product by type of property, international funds continued to be the undisputed stars in terms of buyer profile.

Between January and August, funds accounted for 42% of the total volume invested; whilst real estate companies represented 28% of the total (…). Meanwhile, the Socimis, who were the most active investors in 2014 and 2015, have seen their share of the cake decrease to 11% so far this year.

“On the other hand, core investors have returned to the market, with the acquisition of prime properties located in Madrid and Barcelona. Insurance companies, family offices and other institutional investors have purchased assets such as offices and retail premises in Madrid, with yields of around 3%”, said Carlos López, Partner at Catella.

Year-end

“…We expect 2017 to be a record-breaking year, with an investment volume of around €10,000 million, compared to the figures of more than €8,500 million in tertiary investment in 2016”, says López (…).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Hispania Invests €190M To Reposition Its Hotel Portfolio

25 September 2017 – Expansión

Hispania is going to invest €190 million to reposition its hotel portfolio between now and 2019 to maximise its value. At the end of the first half of the year, the Socimi managed by Azora owned a portfolio of 39 hotels and 11,059 rooms, most of which are located in the Canary Islands.

Some of the most strategic hotels, according to the presentation to investors submitted by Hispania to the CNMV on Friday, include the Hotel Club San Miguel (Ibiza), on which it is going to spend capex of €50 million; and the Hotel Holiday Inn in Madrid, acquired in 2015 and in whose modernisation, the Socimi is going to invest €34 million. In parallel, Hispania has another €100 million of capex budgeted for other potential projects.

In addition to the investment in the modernisation and repositioning of the establishments in its portfolio to superior categories, Hispania is basing its model on a diversified portfolio of operators – it works with Barceló, Meliá, NH and Vincci, amongst other hotel chains – and it has lease contracts that combine fixed and variable components. Its roadmap, according to the presentation, forecasts achieving cost savings through economies of scale, as well as enhancing direct sales.

Currently, 69% of the revenues from its hotels come through tour operators. Thanks to its asset optimisation strategy, Hispania expects to increase the value to its shareholders by more than €30 million in the Guadalmina and Holiday Inn Hotels. Meanwhile, in the portfolio as a whole, it hopes to generate €60 million of additional cash.

The company, which has not detected any impact on demand following the terrorist attack in Barcelona in August, expects revenues per available room (RevPar) to grow by more than 10% this year.

Original story: Expansión

Translation: Carmel Drake

Riu Gets Green Light For Its Renovation Of Edificio España

22 September 2017 – Eje Prime

After a very drawn out negotiation process and having being passed from Wanda to Grupo Baraka and then to the hotel chain Riu, Edificio España has finally received the green light for its renovation. The Town Hall of Madrid has granted the building permit to allow Riu to start to refurbish its Riu Plaza.

Sources at the Town Hall’s Sustainable Urban Development (DUS) department, explain that the Activities Agency granted the authorisation yesterday, which, given the complexity of the construction work, establishes a program of approval comprising two phases: firstly, the restoration work will be performed, and then the definitive licence will be granted for the inauguration of the hotel, according to EFE.

The first phase of the building permit covers work to conserve the façades, external work to recover recesses, the dismantling of embellishments and the replacement of windows and railings, as well as partial restructuring work, refurbishment and restoration for the adaptation of the existing structure and the dismantling of protected interior elements.

On the other hand, the second phase includes the definitive licence for the inauguration of the hotel activity and the retail space, with the performance of partial restructuring work, construction of internal partition walls and facilities, and external work to assemble the identifying elements of the hotel and the planned retail space, according to sources in the team led by José Manuel Calvo.

Located in the central Plaza de España, the property was constructed by Spanish architects Julián and José María Otamendi between the years 1948 and 1953, and it was the tallest building in Spain at the time. The Chinese multinational Wanda acquired the iconic building with the aim of opening a hotel, luxury homes and a shopping centre, but to that end, it wanted to pull down the existing structure and then reconstruct the façades at a later date, something that the municipal Government refused to allow.

In the end, Wanda sold the building to Grupo Baraka, owned by the Murcian businessman Trinitario Casanova, who visited the property together with the mayor of Madrid and who promised to build a hotel with two swimming pools and a shopping arcade, in collaboration with Riu.

The hotel chain then reached an agreement with Baraka to acquire 100% of Edificio España, and so it will be the entity responsible for undertaking the construction work, in two phases.

Original story: Eje Prime

Translation: Carmel Drake

Be Mate Launches Tourist Apartment Management Business

14 September 2017 – Expansión

Kike Sarasola (pictured below), owner of the Room Mate hotel chain, has taken a new leap forward in his activity as a tourism entrepreneur by taking over the management of a premium building in the centre of Madrid comprising tourist rental apartments. The operation is being undertaken through Be Mate and is the pre-cursor to a new line of business that involves the exclusive management of apartments for third parties, which is expected to grow to include 600 units. As part of its strategy, Be Mate is already considering taking over the reins at two other tourist buildings in Madrid, as well as at another two in Barcelona.

“They might be the best 36 tourist apartments in Madrid”, said Sarasola after announcing the deal, which sees him get ahead of the competition. The building is located on Calle Cadarso, opposite El Tempo de Debod, a premium area in the capital.

The property has a surface area of 3,500 m2 spread over eight floors, two of which, the sixth and seventh, are going to house the most exclusive apartments. The decoration has been entrusted to the architecture and interior design firm ‘Cat in a square’.

The property has already been restored and is owned by a real estate company, which has transferred the management to Be Mate. “Several large funds are interested in this formula”, which generates returns, explains Sarasola. His company will provide the personnel, technological know-how, revenue management and other tools that are synonymous with Be Mate.

Sarasola distinguishes his business from the Airbnb model and says that his facilities have not been included in any of the administrative actions filed against tourist apartments. “We are in favour of smart regulation where good solutions can be found for everyone”.

As it celebrates its third anniversary, Be Mate is getting ready to tackle an “ambitious expansion plan”, which includes opening new properties in London, Rome and San Sebastián, where the hotel chain Room Mate, also founded by Sarasola, plans to also open a new hotel in 2018.

In 2017, Be Mate expects to multiply its turnover nine-fold, to €6 million, by selling more than 80,000 room nights. Its portfolio of apartments has grown to 10,000, and has hosted more than 30,000 guests. 30% of its revenues come from international markets (…).

Original story: Expansión (by Iñaki de las Heras)

Translation: Carmel Drake

Nobu Hospitality Announces Opening Of Nobu Hotel And Restaurant In Barcelona

13 September 2017 – Hospitality Net

Globally established luxury lifestyle brand Nobu Hospitality, founded by Nobu Matsuhisa, Robert De Niro and Meir Teper, and the Selenta Group, a Spanish real estate and hotel group owned by Jordi Mestre, is delighted to announce their continued European expansion into Barcelona, Spain.

Set to open by the end of 2018, as part of a multi-million Euro refurbishment of Gran Hotel Torre Catalunya, this property will be an integrated mix of a Nobu Hotel and Restaurant reflecting the innovation and imagination that has become synonymous with the name Nobu. The property will continue to be part of the Selenta Group collection. The partnership agreement with Nobu Hospitality gives rise to the shared management of the new establishment.

Capturing the unique essence of the famous European city whilst reflecting the brand’s core aspirational lifestyle offering. The fourth European hotel and third Spanish property from the highly recognized brand, the 250 rooms and suites along with its meeting rooms, event spaces and Nobu restaurant will be under a long-term management contract with Nobu Hospitality.

Original story: Hospitality Net

Edited by: Carmel Drake

The Banks & Rifá Negotiate Future Of Gran Hotel Almería

7 September 2017 – La Voz de Almería

The future of the Gran Hotel Almería, the most iconic hotel in the city, which has been closed for almost three years, has been in the hands of a US investment fund since August.

The fund in question is Blackstone, the financial group chaired in Spain by Claudio Boada, which, based on a decision by Banco Santander, has been awarded the entire real estate portfolio that it inherited from Banco Popular, including Aliseda. The portfolio contains, amongst others, the legendary Almería hotel, which has housed many stars from the spaghetti westerns, amongst others.

The portfolio sold to the fund by Ana Botín includes 100% of the sales platform that it received from Popular just a few months ago. The ownership of Aliseda will now be shared between Blackstone (51%) and Santander (49%), in a deal that saw Botín’s bank receive €5,000 million from its new North American partner. Previously, Santander had purchased that stake from the private equity funds Värde Partners and Kennedy Wilson Holdings.

Altogether, the properties transferred – including the Gran Hotel Almería – have a book value of €30,000 million, which is whereby removed from Banco Popular’s balance sheet. The portfolio contains a range of assets from retail premises to homes, industrial warehouses, hotels and plots of land, the majority of which are located in Andalucía.

Miguel Rifá, the Tax Authorities’ largest debtor in Almería, with an overdue balance of €27.5 million, is still the official owner of the Gran Hotel. The property has remained closed for more than two years, during which time Banco Popular decided not to execute the embargo order because, according to financial sources, it did not have a clear project or a solvent buyer (…).

Aliseda spokesman

A spokesman for Aliseda in Madrid declared yesterday to La Voz de Almería that “the Gran Hotel Almería file is still with the loan management department; it is no longer on the balance sheet of Banco Popular; and negotiations are being held with the owner to find a solution for the property”.

All indications are that the role of Blackstone is going to be key over the next few months if the Gran Hotel Almería is to be unraveled from this financial web in which the establishment is immersed. Stars of film and music have stayed there including Sergio Leone, Harrison Ford, Claudia Cardinale, Steven Spielberg, Brigitte Bardot and Ringo Starr.

Santander’s aim is for the weight of Popular’s real estate ballast to be insignificant within two years. Blackstone has extensive experience in Spain in the management of delinquent mortgages.

In 2014, it was awarded a portfolio containing 40,000 contracts by Catalunya Caixa. On 3 December 2012, Miguel Rifá filed for voluntary creditor bankruptcy for the companies Hotel Almería S.L.U., Predios del Sureste and Vosges due to insolvency. Nevertheless, he excluded the Gran Hotel Almería asset from that procedure, of which Banco Popular was the principal creditor.

The combined debt of the Miguel Rifá’s bankrupt companies amounts to €54 million.

Original story: La Voz de Almería (by Manuel León)

Translation: Carmel Drake

Sabadell Engages Lazard To Evaluate Future Of HI Partners

29 August 2017 – Expansión

Banco Sabadell is studying the best solution for its hotel manager HI Partners. To this end, the financial entity has engaged the investment bank Lazard to analyse the private sale of its subsidiary or to search for a shareholder to acquire a majority stake in the company, according to market sources.

In this way, Sabadell is opening a window of opportunity to those who may be interested in taking full or majority control of its hotel management company, whilst it continues, in parallel with the IPO of the same entity.

These two options will allow Sabadell to make cash on the one hand and undo its positions, taking advantage of the current investor appetite in the real estate sector and, specifically, the interest in hotel assets, and secondly, to find a partner to take a majority stake and whereby deconsolidate the business from its balance sheet.

The operation, known in the market as a dual-track deal, allows the company to launch a sale and the search for interested parties in parallel to and at the same time as it undertakes the stock market debut process.

In this way, Lazard’s commission is independent of the contract that HI Partners signed to evaluate the feasibility of listing the company on the stock market.

Opportunities

Sources at the bank consulted by Expansión have indicated that this represents a “very preliminary sounding out” of the various deconsolidation and value-generating options. (…).

In this sense, the CEO of Sabadell, Jaime Guardiola, said during the presentation of the bank’s most recent results that the vocation of the financial entity is not to remain as managers over the long term: “we want to exit and we have a very good opportunity ahead of us”, he explained.

HI Partners is led by Alejandro Hernández-Puértolas (pictured above centre), CEO of the company, who, together with Sergio Carrascosa (pictured above left) and Santiago Fisas (pictured above right), two other former executives of Reig Capital, comprise the management team.

The group was created in 2015 following the transfer of around twenty hotels by Banco Sabadell. The financial entity had foreclosed those assets during the crisis following the non-payment of debts. Moreover, HI Partners is responsible for managing the bank’s hotel debt.

IPO

To control these assets, the hotel investment and management arm of Banco Sabadell created two companies: one to hold the best hotels in the chain, HI Partners Holdco Value, and another containing smaller hotels in secondary locations, HI Partners Holdco Gestión Activa, with the intention of improving their management to then sell them on.

For the time being, Sabadell is not ruling out any of the options and is continuing to analyse the debut of its hotel management and investment subsidiary on the stock market.

Before the summer, the bank engaged the investment banks Citi, JPMorgan and Credit Suisse to sound out the market and analyse the feasibility of listing its hotel management subsidiary on the stock market (…).

In the event that the bank decides to debut the company on the stock market, the operation will focus on the company that controls the most strategic assets: 14 high-end hotels located in the main tourist areas and which, as at 30 June, had a combined appraisal value of €689 million, with more than 3,700 rooms in the portfolio.

Original story: Expansión (by R. Arroyo and J. Orihuel)

Translation: Carmel Drake

The Race To Buy Hotels On The Costa del Sol Intensifies

29 August 2017 – Málaga Hoy

More than 20 hotels along the Costa del Sol and in Málaga have changed hands in just three years. The exceptional data in the tourist sector and the lack of interest in other assets have converted hotel investment into a highly disputed prize. At the beginning of August, Internos Global Investors, a real estate investment fund founded in 2008 by Jos Short and Andrew Thornton, two Brits with prior experience in the real estate sector in the USA, confirmed the purchase of Vincci Posada del Patio, a five-star property located in the centre of Málaga, for €26.7 million. This is just one example of a phenomenon that seems unstoppable right now.

In July, the Hotel Príncipe Sol de Torremolinos changed hands for the second time in two years. The Meliá group sold it in 2015 to the US investment fund Starwood Capital. That operation formed part of a global agreement comprising seven hotel complexes in Spain. Nevertheless, the US firm held onto the property for just 24 months and sold it in July to the British fund London Regional Properties.

At the beginning of the year, Hispania Activos Inmobiliarios (….) acquired its third hotel in the province: namely, the NH Málaga, a complex for which it disbursed €23 million with the commitment of undertaking an extension amounting to an additional €18 million. In 2015, it acquired Vincci Málaga (€20 million) and in 2014, it purchased the four-star Hotel Guadalmina from the Moroccan businessman Judas Azuelos in an operation estimated to be worth €21.5 million.

(…) One of the Hispania’s rivals in the hotel market is HI Partners, created by Banco Sabadell in 2015 (…). That entity currently owns more than 30 establishments, of which three are located in Málaga. In 2015, it purchased the Hotel Silken Puerta Málaga, which has been renamed Sercotel Málaga (…). In 2016, it acquired Incosol (…) and at the end of last year, it bought the four-star Hotel Málaga Palacio from the AC Group (…).

In addition, at the end of 2016, the French fund Foncière des Régions spent more than €500 million on 19 hotel establishments that Merlin Properties owned in Spain, including the Tryp Alameda in Málaga. That operation was signed almost at the same time as the arrival of Activum SG Capital (….), which acquired the Marqués de Sonora building located on Calle Granada from the Azucarera Larios company, which it plans to convert into a luxury hotel with 82 rooms.

Moreover, Mazabi, an investment fund that manages the wealth of eight Spanish families, acquired the former Hotel Senator de Estepona at the end of 2015 (…).

Plenty of other groups have also expressed their interest in joining the ever-expanding list of investors with properties along the Costa del Sol, including the Mallorcan entity Logitravel, the hotel group Palia and the Catalan firm Estival Group (…).

Original story: Málaga Hoy

Translation: Carmel Drake