Hispania to Convert the Café La Granja Building in Bilbao into a Hotel

10 October 2018 – El Correo

Thanks to the significant investments carried out in recent years, the investment fund Hispania has become the largest hotel group in Spain. It has outperformed traditional companies in the sector such as Meliá, HI Hoteles and Hoteles Globales in terms of the number of establishments and rooms. At the height of its expansion phase, boosted at the end of last year by the purchase of the Alua chain – which saw it acquire seven resorts in the Canary Islands and the Balearic Islands for €165 million – it has set its sights on Bilbao. Just a week after another high-profile fund, the Madrid-based Millenium Group announced its intention to convert Banco Santander’s headquarters on Gran Vía into a luxury hotel, Plaza Circular is now going to witness the transformation of one of the Bizcayan capital’s most iconic buildings: the site that formerly housed Café La Granja.

The hostelry establishment, which started life on 31 July 1926 and which was acquired by the real estate firm Navarra Fitbox two years ago, has been closed since 8 February 2017 when, unexpectedly, it pulled down its shutters for the very last time. The insurance company Helvetia sold the property for almost €7.5 million. After 90 years of uninterrupted activity, the historical café has only re-opened its doors since then on a sporadic basis to host one-off events of a cultural nature, such as book fairs. The offices and insurance companies that used to occupy the upper five floors have been evicted, starting back in 2010 (…).

Hispania is going to strengthen the hotel supply in Bilbao, which is experiencing a genuine frenzy, with the planned opening of seven new properties over the medium term. The fund has been planning its debut in the town for a while, but its intentions have always focused on this area, which will draw a new Bilbao with the arrival of the fashion giant Primark and the launch of the Regional Government’s international entrepreneurship centre in the former BBVA tower, which was sold for €100 million two weeks ago. The arrival of the AVE and the strong commercial positioning have pushed up prices considerably in this area. Like in the case of the building work to be carried out on the site of Santander’s former headquarters, the transformation of La Granja will have to be approved by the Town Hall’s Heritage Committee, which has not yet assessed the project, given that it is an artistic building. That procedure may be completed this month (…).

Original story: El Correo 

Translation: Carmel Drake

Irea: What Led to Last Year’s Record Inv’t in Spain’s Hotel Sector?

12 January 2018 – Hosteltur

Last year saw investment in the Spanish hotel sector break all records, with investors spending €3.907 billion on transactions involving existing hotels, properties for conversion into hotels and land for the construction of hotels. That figure represents an increase of almost 80% with respect to 2016, according to Miguel Vázquez, Managing Partner of the Hotels Division at Irea; and was the result of the sale of 182 establishments comprising 28,813 rooms, with an average price per room of €119,000, compared with an average price per room of €92,000 in 2016 and of €85,000 in 2015, which represents an increase of 40% in just two years (…).

According to the Irea Director, this investment boom was driven “not only by the greater number of operations but also by the fact that the prices of the assets sold were higher as they were coming onto the market after being repositioned in recent years. The types of investors have also changed, as have their demands in terms of returns: around 5-6% in the urban segment and around 6-7% in the holiday segment, given that we are no longer seeing as many opportunistic funds entering the market (…)”.

In fact, he has quantified that “more than 2,000 holiday hotels still need to be renovated and repositioned. There is a wide range of opportunities that the funds are focusing on, in search of agreements with small chains at times of generational changes and when they are interested in selling…or not, because the strong buyer pressure is continuing to motivate owners who are not typically sellers to put their assets on the market, especially independent operators. And that is leading to the entry into the market of large holiday hotel portfolios, which is what investors are backing Spain for, as well as independent hotels”.

Forecasts for 2018

And after “the stratospheric data of 2017”, in the words of Vázquez, “the inertia with respect to 2018 is very positive, the year is starting off very well”, although he thinks that hotel investment will moderate and “the effect of the uncertainty in Cataluña will make it very difficult for us to see a repeat of last year’s figures”.

Nevertheless, he cites three operations that should be resolved during the first few months of this year: the completion of the purchase of the Alua portfolio by Hispania (…); the sale of a portion of the Ayre hotel portfolio, which is currently on the market; and the launch of a hotel Socimi by a financial entity with 15 establishments, which could take place soon.

Vázquez estimates that the investments already committed for the first few months of the year identified by Irea amount to €4 billion, comprising mainly new build projects, taking advantage of the increase recorded in the purchase of land for the construction of hotels, with operations in Bilbao, San Sebastián, the south of Tenerife, Barcelona and Sevilla.

In terms of the strengths in the market, besides the repositioning of hotels that is leading to an improvement in competitiveness and the appeal of Spain as a destination, the Director highlighted “the magnet effect of qualified investors such as Blackstone, which are reinforcing Spain as a destination for hotel investment” (…).

Weaknesses: overheating

Vázquez highlighted the overheating of prices that is happening in destinations such as the Canary Islands, where the average (sales) price per room has increased to €152,000, compared to the national average of €119,000, although, it should also be taken into account that “the operation that carried the most weight in terms of those figures was Sabadell’s sale of HI Partners to Blackstone (…), involving high quality, repositioned hotels, which increased prices”.

In fact, the most expensive prices were recorded in Barcelona and Madrid, which holds the record for the sale of the most expensive room with Operación Canalejas, for approximately €1.4 million, whereby exceeding the figure of €1.2 million recorded during the sale of Hotel Villa Magna (…).

In the Balearic Islands, as the director acknowledges, “there is still more margin because there are a lot of hotels there that still need repositioning and, although there is price inflation, it is not as marked as in the Canary Islands, which benefit from having year-round demand and five years of high occupancy rates, which drives up prices”.

Original story: Hosteltur

Translation: Carmel Drake

Blackstone Negotiates Purchase of Grupo Alua’s Hotels

18 December 2017 – Expansión

The US investment fund Blackstone wants to strengthen its position in the hotel segment in Spain. After acquiring Sabadell’s hotel portfolio in October for €630 million, Blackstone is now analysing the acquisition of the hotel portfolio owned by Alua Hotels & Resorts to strengthen its presence in the market.

Sources in the sector explain to Expansión that the US fund has been negotiating with the owners of Alua for several months regarding the operation and, although it is not the only player bidding for its portfolio, it is one of the best positioned to close the deal. The portfolio owned by Alua Hotels & Resorts currently includes seven hotels with more than 1,700 rooms located in different parts of the Balearic and Canary Islands.

Specifically, Alua owns four establishments in Palma de Mallorca: the AlauSoul Palma, with 120 rooms; the AluaSoul Mallorca Resort, with 371 rooms; the AluaSoul Alcudia Bay, with 171 rooms; and the AluaSun Torrenova, with 256 rooms.

Management agreement

In addition, it owns the AluaSoul (in Ibiza), with 290 rooms; the Hotel Parque San Antonio (in Tenerife), with 252 rooms; and the Hotel Ambar Beach, (in Fuerteventura) with 244 rooms.

Alua Hotels & Resorts –previously known as Feel Hotels Group– was created in 2015, inspired by the European private equity firm Alchemy Special Opportunities and by Javier Águila, former Director of Orizonia, following the purchase of six hotels, with more than 1,200 rooms, in Mallorca and Ibiza. The portfolio used to be owned by Marina Hotels (…).

Moreover, Alua Hotels & Resorts manages five Intertur Hotels acquired in May 2017 by KKR and Dunas Capital. Those establishments, which comprise 1,120 rooms in Mallorca and Ibiza, were worth just over €120 million.

The agreement reached between KKR, Dunas Capital and Alua Hotels & Resorts considered the repositioning and modernisation of the five establishments and the management of the hotels by Alua following the entry into force of the agreement and their marketing under its brand in 2018.

Alua Hotels & Resorts, which last year recorded turnover of €28 million, has more than 1,200 employees.

Record investment

The tourism boom in Spain, the appetite for real estate and the liquidity in the market are continuing to encourage hotel investment, which may reach €3 billion by the end of the year; that would represent a new record for this segment (…).

Moreover, if these negotiations prove successful, the operation would allow Blackstone to shore up its position in Spain. The US fund has become one of the stars of the real estate sector this year, having closed some of the most high-profile transactions in recent months (…).

Of the (14) hotels that Blackstone purchased from Sabadell, six are located in the Canary Islands (two in Tenerife and four in Gran Canaria) and the rest are located in Cataluña (in Sitges and Roses), the Community of Valencia (in Benidorm and Valencia), Málaga (two) and another two in Mallorca and Madrid (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake