Sabadell To Invest €450M In Its Hotel Arm

4 December 2015 – Expansión

Hotel Investments Partnership (HI Partners), the hotel management and investment arm of Banco Sabadell, is backing itself forward to become one of the main players in the Spanish hotel sector. The firm wants to become one of the largest hotel owners in Spain, involving itself in the management of hotels and improving their income statements. “There is a significant opportunity in the market for the creation of large portfolios of hotel assets”, says Alejandro Hernández-Puértolas (pictured above, centre), CEO of HI Partners.

The company will invest €450 million over the next three years to refurbish and increase the value of its hotels, an amount that will be completely financed by Sabadell during this first phase.

The bank controls 99% of the company’s capital and Hernández-Puértolas and two other partners, Sergio Carrascosa and Santiago Fisas (pictured above, left and right, respectively), own the remaining 1%. Enric Rovira, Deputy CEO of the Sabadell, is the President of HI Partners, which has a dedicated team comprising 22 professionals and is managed independently of the bank.

Creation of two vehicles

Sabadell transferred 22 hotels with 1,600 rooms to HI Partners, after it had accumulated them on its balance sheet during the crisis as the result of foreclosures due to unpaid debts. Moreover, the entity has entrusted the team with the management of a portfolio of hotel debt amounting to €800 million, which as around one hundred assets associated with it. According to Hernández-Puértolas, around thirty of these hotels may be transferred to HI Partners over the next few years, increasing the number of rooms owned by the investment company from 1,600 to 8,000. Meanwhile, HI Partners is also analysing the purchase of assets in the market that are not linked to the bank.

For the management of this real estate portfolio, HI Partners has just constituted two new companies: HI Partners Holdco Value Added and HI Partners Holdco Gestión Activa. The first vehicle will be the focus of most of the company’s efforts and will receive around 90% of the investment. It will take ownership of the best hotels in the portfolio, notably the largest properties, those situated in premium areas and those capable of generating significant yields once they have been refurbished. This company currently owns three assets: the Hotel Prestige Coral Playa, located on the Costa Brava; the Silken Málaga – which HI has just purchased from Urvasco -; and the new hotel that the company is constructing on Calle Atocha in Madrid, which will be managed by the Axel chain.

The thirty-odd hotels to be transferred to HI Partners from Sabadell’s debt portfolio are also expected to be incorporated into the Value Added company. The challenge is for that vehicle to generate an EBITDA of €35 million in 2018 and of €70 million in 2021.

Meanwhile, HI Partners Holdco Gestión Activa now owns 19 hotels, the majority of which are smaller properties, located in secondary areas. The objective is to divest the majority of these establishments, although the firm wants optimise their management first. As such, it expects to sign agreements with several hotel operators to this end.

Original story: Expansión (by Sergi Saborit)

Translation: Carmel Drake

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