Meliá, Barceló and NH Implement Asset Light Model

2 September 2019

The major hospitality groups Barceló, Meliá and NH are taking advantage of the fervour in the Spanish real estate market to sell off some of their real estate holdings to interested funds and socimis. Many of the firms are implementing an asset rotation policy, shedding capital-intensive investments and looking to switch to a policy of hotel management and leasing.

To this end, Meliá, Barceló and NH have sold hotels worth approximately 500 million euros over the last two years as a wave of new investors, many socimis, have entered the market. Meliá began its asset-light policy a decade ago, and it is looking to increase the percentage of its EBITDA from its current 32% to 50% by 2024. In 2019, it accounted for just 2%.

Barceló is following the same sort of strategy, selling a hotel in Marbella to Hispania for €19 million. In 2017, Barceló sold 24% of its hotel sector Socimi Bay for €172 million, holding into long-term leases on the hotels.

NH, now part of the Thai group Minor, sold the NH Collection Barbizon Palace in Amsterdam to the German asset manager Deka for €156 million earlier this year, while also maintaining a 20-year lease on the property. NH has assets valued at €2.1 billion, including 350 hotels, with 54,000 rooms. Of those, NH only owns 76. The rest are leased or managed by the hospitality group.

Original Story: Expansión – Rebeca Arroyo

Adaptation/Translation: Richard D. K. Turner

Blackstone’s Spanish Hotel Portfolio is Worth €3.5bn

3 June 2019 – La Vanguardia

In recent years, the US fund Blackstone has invested €3.5 billion in the Spanish hotel sector through its specialist manager HI Partners, making it the largest hotel owner in Spain and the third largest in Europe after the Swedish firm Pandox and the French group Covivio.

HI Partners was created four years ago and owned 17 establishments by the time Blackstone acquired it in 2017 for €640 million. A year later, the US fund launched a successful takeover bid for the Socimi Hispania, which gave it control of another 45 hotels.

According to Alejandro Hernández-Puértolas, Partner and CEO of HI Partners, the firm now owns 62 establishments in Spain, with around 18,000 rooms. By region, 53% of its rooms are located in the Canary Islands, where it has 25 establishments, 26% are in the Balearic Islands (18 hotels) and the remaining 21% are located across the Peninsula above all in the Costa del Sol, Valencia and Cataluña.

HI Partners is headquartered in Barcelona and has offices in the Canary and Balearic Islands. It employs 100 professionals and its hotels are managed by 19 different operators including Marriott, Barceló, Hilton, Melià and Ritz Carlton.

Original story: La Vanguardia (by Rosa Salvador)

Translation/Summary: Carmel Drake

Marathon Buys an Office Building & a Hotel in Madrid for c. €30M

21 November 2018 – Expansión

The US investment fund Marathon is increasing its commitment to Spain with the acquisition of a mixed-use complex of buildings in Madrid, which houses an office block and a four-star hotel managed by the Mallorca-based chain Barceló.

Specifically, the US investment fund has closed an agreement with Credit Suisse Real Estate, owner of the asset until now, to acquire the complex for around €30 million, according to market sources speaking to Expansión.

The complex has a total surface area of 14,000 m2 and is located at numbers 19 and 21 Calle de Julián Camarillo in Madrid, one of the most established office districts in the east of the capital, a few minutes by car from the Ifema exhibition centre and Adolfo Suárez-Barajas airport.

The operation has been advised by the real estate consultancy firm Knight Frank.

The complex includes an office building, with a surface area of more than 9,100 m2, occupied by several tenants: Adquira, the company specialising in e-commerce; Lebara, the telephony company; Ixion, the robotics and drone firm; and Norgine, the pharmaceutical business, amongst others.

The complex also has retail and leisure areas and indoor and outdoor parking.

In addition, the asset houses a four-star hotel, managed by Barceló Group, now under the Occidental Hoteles brand.

The Hotel Occidental Madrid Este – previously known as Barceló Torre Arias – has 108 rooms, four of which are junior suites, as well as a gym, sauna and restaurant. The establishment also has two meeting rooms with capacity for up to 80 people.

With this operation, Marathon is strengthening its presence in the Spanish real estate market. The US fund is, together with Attestor, Bank of America Merrill Lynch, Barclays, Deutsche Bank and JP Morgan, one of the minority shareholders of the property developer Vía Célere, which is controlled by Värde (75%).

Moreover, the investment fund acquired the Bahía Azul shopping centre in Málaga in 2016.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

AC Hotels to Invest €5M in its First ‘Autograph’ in Valencia

1 October 2018 – El Mundo

AC Hotels, owned by the Navarran businessman Antonio Catalán, has acquired the rights to operate the former CAM building in Valencia, on the central street, Calle Pascual y Genís. Until now, the tenant was the Valencian firm Join Contract, which was granted use of the property by Solvia Group (Banco Sabadell) for 30 years in July, and which is now placing that use into the hands of this prestigious chain.

According to sources speaking to El Mundo, the firm AC Hotels competed against other major chains in the sector including NH and Barceló, as well as the local chain Grupo Intur, owned by the Gimeno family, which controls a large proportion of the major hotels in Benicàssim. Nevertheless, AC Hotels, which already has a hotel very close to what will become its newest location, decided to push hard for this site to whereby expand its business with the construction of what will be its first luxury hotel in Valencia.

That is why it will be called ‘Autograph’, the high-end brand that this operator uses to distinguish its top hotels. It will be the first of its kind in Valencia, although the firm has other luxury hotels with these characteristics operating under the same brand in Madrid and Barcelona.

Sources familiar with the operation have said that AC Hotels is going to invest almost €5 million in the renovation of the iconic building. If there are no delays, the building work will begin before the end of the year. The execution of the work will be carried out by the Valencian firm Join Contract, the same entity that has transferred the use of the asset to AC Hotels for 30 years (…).

More than 60 rooms

Although the project is still in its preliminary phase, some details have been published about the future AC Hotels Autograph. With a surface area of 4,500 m2 (580 m2 per floor), the hotel will have around 60 rooms, including suites and standard rooms. There will be a restaurant and hall on the ground floor, and there will be a small swimming pool for guests on the roof (…). The building will have nine floors in total, two of which will be used for parking (…).

Antonio Catalán, leader in the sector

AC Hoteles, from Antonio Catalán, is one of the leading chains in the hotel sector in Spain. It was founded in 1997 by this established Navarran businessman, who previously sold the NH chain to an investment fund for €70 million. After founding AC Hoteles, Catalán sold half of his shares to the chain Marriott for €80 million. Today they have more than 140 hotels open or under development around the world (…).

Original story: El Mundo (by Sergio Aspas)

Translation: Carmel Drake

Thai Hotelier Minor Acquires 8.6% of NH from Oceanwood

23 May 2018 – Expansión

The Thai hotel company Minor Hotels Group has entered the shareholding of NH Hotels with the purchase of a package of 30 million shares, representing 8.6% of the Spanish hotel chain’s share capital, from the British investment fund Oceanwood for around €190 million, as revealed by Expansión.

The agreement reached between Oceanwood and the company headquartered in Bangkok has been closed for a price of €6.40 per share, slightly above NH’s share price at the end of trading yesterday (€6.35). The hotel chain’s share price has appreciated by 5.83% so far this year. Evercore has been the advisory bank to Minor. On the legal, Baker has advised the Thai firm whilst Garrigues has advised Oceanwood.

Minor, whose shares are listed in Bangkok, has a market capitalisation of USD 6 billion and owns 161 hotels in 26 countries. The chain is the owner of the brands Anantara, Avani, Elewana, Oaks and Tivoli and also operates establishments owned by the chains Four Seasons, Marriott and St. Regis.

The purchase of this share package makes Minor NH’s third-largest shareholder, behind the Chinese holding company NHA, with a 29.5% stake and Grupo Hesperia, in the hands of the businessman José Antonio Castro, with 9%. Oceanwood will continue as the fourth-largest shareholder, with almost 5%, although it will strengthen its weight after exercising the conversion rights of a convertible bond that it subscribed to five years ago and which it will execute soon. The fund first invested in NH in 2013 by purchasing stakes owned by the savings banks and has grown its share over the last few years.

In this way, as a consequence of the conversion of all of NH’s convertible bonds, Oceanwood will hold 9.5% of the share capital post-conversion, assuming that all of NH’s convertible bonds currently in circulation are converted.

The exit of the Chinese

This shareholder move comes in the middle of the divestment process being undertaken by HNA, which in January announced that it had engaged JPMorgan and Benedetto, Gartland and Company to “review” its shareholder position in NH and to identify potential buyers.

That decision by the Chinese group came after Barceló’s failed proposal to merge its businesses with those of its rival NH. The offer, which was overwhelmingly rejected by NH’s Board of Directors, stirred up rumours of a takeover once again. Last week, the Chinese group revealed that, after receiving interest from various investors, it plans to put its 29.5% stake up for sale.

NH, with 380 hotels and around 59,000 rooms, closed the first quarter of 2018 with a net profit of €21.7 million, compared with losses of €24.8 million during the same period in 2017.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Sabadell Earns €35M From the Sale of its Last 11 Hotels

15 May 2018 – La Vanguardia

Banco Sabadell has definitively completed its divestment from the hotel business by selling off the last of the establishments that did not form part of the package acquired by Blackstone last year. Overall, the bank chaired by Josep Oliu has recorded income of around €35 million from the sale of 11 medium-sized establishments in different parts of Spain. The last one to be sold is the Barceló Estepona, which has been acquired by Hotusa.

In that case, the financial entity has sold the ownership of the property in which the hotel is located. In the majority of cases, the establishments were managed by a specialist company. All of the hotels were left over from the real estate crisis. Sabadell ended up taking ownership of them in recent years in lieu of payments for the debts that their owners had taken out and which they could not repay. In other cases, they were the direct result of mortgage foreclosures for non-payment.

In recent months, the bank led by Jaume Guardiola has been considering several alternatives for its hotel portfolio, including a possible stock market debut. In the end, the entity opted to sell most of the assets owned by the company HI Partners to Blackstone last year. The 11 establishments that were left out of that operation are the ones that have just been sold. In the operation with Blackstone, the bank obtained gains (extraordinary profits) of €55 million from proceeds of €630.7 million. In that deal, it sold establishments such as the ME Sitges Terramar, the Hilton Sa Torre in Mallorca and the Axel Hotel in Madrid to the international fund.

In addition to the Barceló Estepona, the bank has also just divested the following hotels: Barcelona Gate, Margas Golf, Cunit and La Selva. Most of the establishments sold in this final phase were not beachfront properties, nor were they large. Other properties sold recently include the Asta Regia Hotel Jerez de la Frontera acquired by Hotusa, the Aparthotel Augusta in Boí Taüll bought by Kesse Invest, the Balt Hotel Spa in Gijón purchased by Artiem, the Barceló Oviedo acquired by Barceló and the AC Lleida bought by AA Hoteles.

In parallel, the bank is continuing with the process to divest a large proportion of its non-hotel real estate assets that also resulted from the real estate crisis, including those inherited from the now extinct entity CAM. The bank has launched the sale of toxic assets amounting to €10.8 billion through a number of separate operations. It is a significant amount with respect to the €13.5 billion in assets that the bank had registered on its balance sheet at the end of last year.

The CEO Jaume Guardiola also announced last month during the presentation of the entity’s quarterly results that the entity is analysing the future of its real estate subsidiary Solvia. “When there is an opportunity to create value”, it will be sold, explained the director (…).

Original story: La Vanguardia (by Eduardo Magallón)

Translation: Carmel Drake

Blackstone Wants to Create a Hotel Leader with Hispania

5 April 2018 – Expansión

The investment fund Blackstone is considering a corporate operation involving the real estate group Hispania, as revealed by the online edition of Expansión yesterday. Financial market sources indicate that the fund is interested in the group’s real estate assets, rather than in Hispania’s company structure, and may make an offer shortly. Half an hour before the close of trading yesterday, Spain’s National Securities and Exchange Commission (CNMV) decided to suspend trading of the company’s shares when they had risen by 1.65% to €18.50 per share.

In the statement, the regulator indicated that trading would remain suspended “whilst the relevant information is communicated”. The Socimi’s asset portfolio amounted to €2.5 billion at the end of last year, of which €600 million corresponds to the 25 office buildings that it is looking to sell as part of its strategy to focus on the hotel management business. The transfer of that real estate portfolio is already on track and could materialise soon with its sale to the fund Tristan Capital. That portfolio would have to be excluded from the bid that Blackstone is considering, which would amount to around €1.7 billion, according to sources in the real estate sector.

Blackstone’s objective is to acquire Hispania’s hotel portfolio, the largest in Spain, taking advantage of the interest from its existing shareholders, including George Soros, to close their investments in Spain, which were initiated in 2014 and which are expected to be liquidated in 2020. To this end, the price set in the negotiations would have to come close to the valuation of the hotel portfolio, estimated at €1.638 billion as at December 2017, compared to its current market capitalisation of around €2.0 billion. The valuation of the portfolio reflects an important appreciation with respect to the purchase cost of the assets contained therein, in which Hispania invested just over €1.069 billion, and 42% more than the total allocated, including spending on renovations and updates to the properties.

At the end of last year, the Socimi reached an agreement with its until then partner in Bay, the hotel group Barceló, to acquire 100% of that subsidiary. According to the most recent accounts, Hispania’s hotels generated revenues of €129.67 million in 2017, up from €117.8 million recorded the previous year. Of that amount, €77.9 million was generated by properties in the Canary Islands, followed by €22.1 million contributed by hotels in the Balearic Islands and €8.7 million by hotels located in Madrid.

Blackstone is the international fund with the greatest exposure to the Spanish real estate sector, following several record-breaking operations. It owns assets worth €15 billion, including 51% of Popular’s real estate business, with a gross value of €30 billion, but acquired for €5 billion. Last year, it also purchased HI Partners, the hotel subsidiary of Sabadell.

Original story: Expansión (by R.Ruiz/R.Arroyo/M.Á.Patiño)

Translation: Carmel Drake

Top 5 Socimis’ Earnings Soared by 70% in 2017

1 March 2018 – Expansión

Spain’s large listed Socimis – Merlin, Colonial, Hispania, Lar España and Axiare – are continuing their rise. They closed last year with a combined profit of almost €2.4 billion, which represents an increase of almost 70% with respect to the previous year, after increasing their revenues from rental income by 20%, to €1.1 billion.

These companies, which, with the exception of Colonial, made their debuts on the stock market between March and July 2014, now own assets worth almost €26.4 billion, which represents an increase of 17% with respect to the previous year. The five Socimis also have a combined market valuation of €13.4 billion.

The stars of the year were, once again, the Socimis on the Ibex. Specifically, Merlin doubled its earnings in a record year, to exceed €1.1 billion, whilst Colonial earned €683 million, up by 149%.

The firm led by Ismael Clemente generated a recurring profit – proceeding from the core business – of €289 million, up by 31%, and increased its revenues by 34%, to €470 million. Merlin’s asset portfolio had a gross value of €11.3 billion.

Meanwhile, Colonial, which is going to merge with Axiare during the second half of this year following its successful takeover, recorded a 22% increase in recurring profits, to reach €83 million, boosted by rising rents, a better financial result and a lower corporation tax charge due to its conversion into a Socimi in May last year.

Unlike its rivals, Hispania saw a reduction in its profit of 27% to €228 million, after recognising provisions amounting to €95 million for the payment of incentives to its management firm Azora. Moreover, the company in which George Soros owns a stake registered a negative impact in its accounts amounting to €46 million due to the payment of incentives and the cancellation of guarantees following the purchase from Barceló of 24% of Bay for €172.4 million.

Hispania, which increased its revenues by 9.5% last year, had a portfolio of assets with a gross value of €2.5 billion at the end of the year, compared with €2.0 billion at the end of the previous year.

Meanwhile, the Socimi specialising in retail, Lar España, earned 48% more, at €136 million, thanks primarily to the performance of its shopping centres. The company recorded revenues from rental income of €77.6 million in 2017, up by 29%, and has announced divestments of non-strategic assets amounting to €470 million, including offices, residential properties and logistics assets, in processes that are already underway.

Meanwhile, Axiare’s net profit soared by 47% last year, to €218 million. The Socimi, controlled by Colonial since January, closed 2017 with turnover of €69.7 million, up by 36.6%, and assets worth €1.8 billion.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Azora Group Explores its Own Stock Market Debut

15 February 2018 – La Información

The Azora Group, the manager of the moment in the Spanish real estate sector, following the successful launch of its Socimi Hispania, which managed to attract well-known international investors such as George Soros, is now considering its own debut on the stock market, according to financial sources familiar with the situation, speaking to La Información. In parallel, it is continuing to work on the assignment to debut Sareb’s Socimi, Témpore Properties, on the stock market.

According to the sources, the investor group controlled by Concha Osácar (pictured above, third from left) and Fernando Gumuzio (pictured above, far left), through the parent company Azora Altus, has already taken the first steps towards processing its debut on the stock market, a move that the company declined to comment on when consulted in this regard. According to the definition that is available on the website of one of the other Socimis that it has debuted on the market and which it now manages exclusively following Hispania’s model, Colón Viviendas, the Azora Group “is made up of independent private equity managers specialising in the real estate sector”. Founded in 2003, the group employs 400 professionals and, according to its own estimates, manages an asset portfolio worth more than €4.1 billion. In addition to Hispania and Colón Viviendas, the group manages another collective investment instrument: Lazora.

Two well-known bankers are behind the Azora Group, both former members of Banco Santander’s private banking team: Concha Osácar and Fernando Gumuzio, who control the group’s parent company through two holding companies, Baztán Consultores and Hermanos Bécquer 10, respectively. They would be the major beneficiaries of this latest planned move (…).

Change of strategy

The Azora Group’s decision to direct its steps towards the stock market comes just a few months after Hispania’s General Shareholders’ Meeting took the decision to liquidate that Socimi in 2020. The possibility was included in the initial business plan set out at the time by Azora, but the subsequent remarkable performance of the company has opened up the possibility of that project becoming a reality. Not in vain, the firm had climbed to the status of being the largest owner in the domestic hotel sector, with 39 hotels and 11,200 rooms in its portfolio, and a flow of profits significantly higher than forecast: €308 million in 2016 and €185 million in H1 2017, up by 35% YoY.

Having established Hispania’s expiry date, the Azora Group unleashed a series of decisions in the following months. In May, it decided to liquidate Azora Europa 1, another real estate investment fund in which it managed to involve Sabadell Patrimonio, Abanca, Kutxabank, Caixabank, Bankia and investors such as Manuel Jové. The next step was to begin the process to debut a new Socimi on the MAB, Colón Viviendas, whose assets comprise 300 public rental apartments acquired from the Consell Comarcal del Barcelonés back in the day.

Almost in parallel, Azora placed another Socimi on the MAB, through Hispania and in partnership with Barceló. In that case, the assets were linked to the hotel sector, in the form of Bay Hotels & Leisure, with a portfolio worth €790 million, according to the prospectus. That adventure looks set to be coming to an end after Hispania first took over Barceló’s stake and then notified the CNMV, a few days ago, of its intention to exclude the entity from trading on the MAB due to the lack of appetite from minority shareholders and the reduced liquidity of its shares.

Original story: La Información (by Bruno Pérez)

Translation: Carmel Drake

Banco Sabadell Sells 5 Hotels for c. €20M

27 January 2018 – La Vanguardia

Banco Sabadell is continuing to divest its hotel business with the sale of five establishments in recent weeks for a total consideration of almost €20 million, according to market sources. The move comes after the entity sold its hotel management platform HI Partners to the US fund Blackstone for €630.7 million in October.

When it announced that sale, the entity reported that the transaction comprised 14 large and superior category hotels, including the ME Sitges Terramar, the Hilton Sa Torre in Mallorca and the Axel Hotel in Madrid. The bank reported that another 11 smaller hotels had been left out given that they did not fit the profile of the operation. But five of them have been sold by Sabadell in recent weeks, specifically: the Asta Regia Hotel in Jerez de la Frontera acquired by Hotusa; the Aparthotel Augusta in Boí Taüll acquired by Kesse Invest; the Bal Hotel Spa de Gijón purchased by Artiem; the Barceló Oviedo bought by Barceló; and the AC Lleida purchased by AA Hoteles.

Naturally, what Sabadell is selling is the ownership of the property. In most cases, these hotels were managed by other specialist companies. The hotels expanded Sabadell’s real estate portfolio during the economic crisis after their owners offered them to the entity as a way of paying the financial debt that they had contracted. They may also have resulted from foreclosures. The entity chaired by Josep Oliu and led by Jaime Guardiola (pictured above) worked with different scenarios to make its investments profitable, including debuting the company that was managing the hotels on the stock market. However, the appearance of Blackstone’s offer tipped the balance towards the sale. According to a statement filed with the CNMV, the bank obtained profits (extraordinary profits) of €55 million from the divestment.

The hotel manager does not form part of the bank’s business and a specific division had only been constructed to manage the foreclosed assets in the best way. The establishments that have now been sold are not beachfront or large properties, although some are located in purely tourist areas such as the case of the Aparthotel in Boi Taüll, which is situated in the closest urbanisation to the Llerida ski resort.

In the case of the sale of the 5 small hotels, the bank declined to disclose the amount of the sale although market sources indicate that the total transaction consideration amounts to around €20 million. Sabadell plans to continue with the divestment of the 6 remaining hotels over the next few weeks.

Original story: La Vanguardia

Translation: Carmel Drake