Hotels Among Funds’ Fondest Assets

19/12/2014 – Cinco Dias

Piquing the apetitte since mid-2013, hotel assets were twice as often chosen by international funds that invested 1.1 billion euros in them in 2014, JLL reports.

Due to economic revival and falling prices, this year this type of units were snapped up by Qatari, Chinese, Singapore, local and foreign investors, as well as by the Socimis (REITs) like Hispania.

The 2014 investment volume equalled to 2007 but probably it will not exceed last year’s 1.25 billion amount. ‘The 2014 was very good but we hope the 2015 to be better’, said Luis Arsuaga, director of the Hotels & Hospitality branch of JLL for Spain and Portugal. The consulting firm pointed out that this year existing hotels or office/residential buildings to be converted into hotels were the top picks.

For example, hotel chain Hipotel bought the Blau Mediterraneo, a Majorcan establishment, for around 80 million euros. Furthermore, the Renaissance, Barcelona, was sold by Marriot to a military fund of Qatar for 78.5 million. Finally, Madrid’s Intercontinental was acquired by Katara Hospitality for 60 million euros.

In April, Chinese investee Jiangsu GPRO purchased the Hotel Valparaiso Palace in Palma de Mallorca for an amount of 48 million euros.

Also, several operations aimed at the property’s use change. To give an example, the skyscraper of Deutsche Bank in Barcelona will be transformed from the central Cuatrecasas law office into a high-end hotel. Its owner, KKH Capital Group paid 90 million euros for the unit. In the same city, Pontegadea, the real estate arm of Amancio Ortega, purchased old Banesto headquarters for 44 million.

The top 2014 transaction is the sale of the Edificio España building (pictured) to Chinese group Dalian for 265 million euros. The property will house a 5* establishment.

In addition, this year Socimis barged in the hotel industry. For instance, Hispania acquired the Melia Jardines del Teide for 36.7 million and two NH hotels for joint 42 million euros. In turn, Barcelo considers selling several establishments to reduce its real estate exposure, while Melia is in talks with Starwood on outsourcing management of its assets.

Madrid expanded its 5* portfolio in 2014. Thus, after annoucing arrival of Four Seasons at the Canalejas complex, Singapore investment group Platinum Estates sealed a 35 million deal on the Hotel Asturias which will be upgraded from 2* to an A1 class.

The funds do not strike only large cities, JLL assured, but they are also interested in other places. The consulting firm doesn’t hide optimism about 2015 investment outlooks for Madrid, the Canaries and Barcelona.


Original story: Cinco Días (by Laura Salces)

Translation: AURA REE