NH Hoteles looks for an Asian buyer for its luxury development company.

It is a part of the adjustment plan designed by NH Hoteles to alleviate its burden of 700 million Euros in debt. For this new phase, the company does not rely on its subsidiary Sotogrande Inmobiliaria, the company through which it manages its vacation resort in Cadiz. According to different sources within the real estate market, the hotel group has placed its participated company, which was founded 50 years ago as the developing company of a great residential complex with luxury and leisure properties for wealthy people, on the market.

After letting the Chinese touristic group NHA, which acquired 20% of its capital for 234 million Euros, enter its capital, the Spanish hotel group is still in need of cash and of improving its financial structure. Furthermore after the opposition to its plan of sale of assets to the real estate fund Hospitality Properties Trust (HPT) by one of the creditors (Royal Bank of Scotland), a transaction  that would have allowed the group to obtain another 240 million Euros (a part as a loan and the other for the sale of hotels).

This unexpected event has forced the company led by Federico González, who landed at NH Hoteles as a managing director at the end of 2012, to prepare a plan to sell assets in order to gain the 250 million Euros it had agreed with HPT. For this reason, just before the summer, the company closed the sale of one of its better properties, the Grand Hotel Krasnapolsky in Amsterdam for 157 million Euros to the real estate fund managed by the insurance company AXA and is now looking for a buyer for Sotogrande.

The task is not easy, as it has already tried to get rid of its division without any success. The opportunity to value the mix of the subsidiary (real estate/hotels/golf) returns now, after several years of losses and labor adjustments, trying to take advantage of the existing international interest in entering the Spanish tourist sector, as confirmed by some of the more recent operations. In this sense, the first options would be the Asian investors.

For the past few weeks NH Hoteles is a clear example of this dynamics. Several funds (BlackRock and Taube Hodson) acquired the 4,3% of the hotel group that was in the hands of the former savings banks Novagalicia and BMN for 46 million Euros, a percentage that was followed by another 5% owned by Kutxabank for another 60 million Euros. These changes could have been bigger if Bankia had agreed to sell its 12,5% to these managing companies.

According to analysts, NH Hoteles offers a high reciprocity with the Spanish and European economic recovery, as the hotel group is present in several countries of the Old Continent. (…)