Tag: Bay

Hispania To Absorb Its Socimi In A Merger

6 March 2016 – Cinco Días

On Wednesday, Hispania Activos Inmobiliarios reported to the CNMV that it is going to absorb its Socimi Hispania Real by means of a merger. The operation was expected by the market and will involve the parent company adopting the tax structure of a listed real estate investment company. The firm will approve the transaction at its shareholders meeting in April.

The two companies have agreed the approval and signing of the merger project as part of a process to rationalise the corporate structure of the group, which has decided to adopt the Socimi regime.

Both the conversion into a Socimi, as well as the absorption of the Hispania Real Socimi by Hispania Activos Inmobiliarios will be subject to approval by the shareholders at their next meeting, which is expected to be held in April.

The company is the full and direct owner of all of the shares of the Hispania Real Socimi, as reported to Spain’s National Securities Market Commission (CNMV).

On 18 February, Hispania Activos Inmobiliarios announced its plans to convert itself into a Socimi. The firm is managed by Azora, whose President is Concha Osácar (pictured above).

Hispania, which debuted on the stock exchange in 2014, had already revealed that its future plans included the possibility of turning the company into a Socimi, a vehicle that has a special tax structure and that is obliged to allocate some of its profits to dividends.

In April 2014, Hispania constituted its subsidiary Hispania Real, which decided to adopt the tax structure planned for Socimis and through which Hispania has closed several asset acquisitions. Nevertheless, the company continued to operate the parent company as a public corporation so as to undertake other types of operations.

In addition, last year, the company bought Barceló Bay Hotels & Leisure (BAY), to create the Socimi with the largest exposure to the Spanish hotel sector, with 9,000 hotel rooms.

Original story: Cinco Días

Translation: Carmel Drake

Hispania Prepares To Convert Itself Into A Socimi

22 February 2016 – Expansión

First full year of operation / The real estate company quadrupled its net profit in 2015, to €73.4 million and will bring forward its dividend payment to this year.

Hispania Activos Inmobiliarios, the real estate company owned by the billionaire George Soros, is preparing to convert itself into a Socimi, after closing 2015 with a net profit of €73.4 million, which represented a four-fold increase in its earnings compared with 2014.

The company, which has maintained its status as a public company until now, in order to benefit from maximum flexibility to invest and create its asset portfolio, announced on Thursday that it will propose its conversion into a Socimi at its next shareholders’ meeting. The real estate company, which was constituted in January 2014 and which has been listed on the stock exchange since March last year, current owns one subsidiary 100% – Hispania Real – which is already registered as a Socimi.

Dividends to be paid sooner than expected

The company, which is managed externally and exclusively by Azora, also communicated its intention to bring forward its dividend payment to 2016. The real estate company closed 2015 with a gross operating profit (EBITDA) of €10 million, compared with the negative balance of €2.5 million it recorded a year earlier.

Last year, it generated net rental income of €38 million, compared with €9 million in 2014. By division, hotel revenues amounted to €16.69 million, plus €4.29 million from hotels under management. Hispania’s hotel portfolio closed the year with 8,234 rooms across 27 hotels, plus two shopping centres.

Meanwhile, the revenues from the office segment amounted to €12.15 million. The company owns a total gross leasable area of 53,621 m2 spread across 25 assets.

In the housing segment, revenues amounted to €4.66 million. Hispania manages a residential portfolio that includes four assets, one in Barcelona (the Isla del Cielo homes) and the other three in the Community of Madrid (Sanchinarro, San Sebastián de los Reyes and Majadahonda). In total, the company’s residential asset portfolio contains 684 homes (200 in Barcelona and 484 in Madrid). The group explained that it purchased 33 assets with an acquisition value of €841 million last year, including the formalisation of the two phases of operation Bay with the Barceló Group, which has a total portfolio value of €458.6 million.

Moreover, since its debut on the stock exchange, the real estate company has invested in 58 assets, with a consolidated value of €1,425 million, according to a valuation performed by CBRE.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Meridia Capital Considers Creating A Hotel Socimi

21 January 2016 – Expansión

The fourth investment fund that Meridia Capital is going to launch will specialise in the acquisition of urban hotels and may be a Listed Real Estate Investment Company (Socimi).

The founder and CEO of the fund manager headquartered in Barcelona, Javier Faus, said at a forum organised by Exceltur in advance of Fitur that “there is capacity in Spain to have three or four Socimis specialising in the hotel sector”. “And not only in the holiday segment”, said Faus, referring to the only pure hotel Socimi in operation in Spain at the moment, namely, Bay, which was created last year as the result of an alliance between Barceló and Hispania. Faus acknowledged that Meridia is currently analysing whether its fourth fund “could be a hotel Socimi”.

“The final decision still needs to be taken, and although that will not happen for a few months, it will be taken in 2016”, he said. The CEO of Meridia also said that the new vehicle will specialise in urban hotels, although the firm still needs to decide whether it will lease or manage these properties and whether or not it will build up a multi-brand portfolio, containing hotels from various chains. Faus added that he has not yet started talks with any hotel group.

Nevertheless, he is very clear about the location of the assets: Madrid and Barcelona, “although the fund may allocate between 15% and 20% of its resources to investment in other countries”, he added.

Investors

The strong interest in Spain from the international markets is helping the Spanish Socimis, which are consequently not facing much difficulty when it comes to raising capital. The urban hotel segment continues to be one of the most attractive, given the strong performance of the tourist sector in Barcelona and the significant recovery that the business sector is experiencing in Madrid.

In fact, experts in the real estate sector say that the biggest problem at the moment is finding assets available for sale, although in the hotel sector the willingness of the large hotel chains to sell buildings and continue leasing and managing them (sale & leaseback) may represent an opportunity for the Socimis, which for the most part, are looking for assets that they can lease.

This would be Meridia’s fourth fund and it may be created almost in parallel to the third, which is currently being established and which is focusing on investment in real estate assets in general. Faus expects that the third fund will raise capital amounting to €250 million, mainly from institutional funds in the US and Europe, but also from insurance companies. Together with bank financing, he expects that it will invest around €600 million.

The previous fund, Meridia II, invested €400 million between 2014 and 2015, of which €150 million came from investors and the rest from bank financing. The first fund launched by Faus, in 2007, was devoted entirely to the hotel sector, and as such the Socimi that he is considering creating now would not be new territory for him. That first fund acquired hotels outside of Spain, operated by a variety of hotel brands. They included the Hotel Ritz-Carlton and the Crowne Plaza in Santiago de Chile, the Four Seasons in México DF, the InterContinental in Sao Paulo and the Hotel W París Ópera, as well as a stake in three resorts in Thailand operated by Six Senses (…).

Original story: Expansión (by Y. Blanco and M. Anglés)

Translation: Carmel Drake

JLL: Hotel Investment Exceeded €2,650M In 2015

12 January 2016 – Expansión

2015 was a record year for investment in the hotel sector, driven primarily by Spanish buyers. The Canary Islands and Madrid were the stars in terms of location. Last year, 143 hotels were sold in Spain worth €2,650 million, which represents an increase of 65.6% compared with 2006, the previous record-breaking year; and more than double the investment volume recorded in 2014 – €1,180 million.

Spain was the third most popular European country for investors, behind the UK and Germany, according to a report by the consultancy firm JLL Hotels & Hospitality Group. And Spanish investors returned to the spotlight, thanks to the improvement in the domestic economy. In 2015, 74% of total investment was made by domestic buyers, compared with 58% a year earlier.

In this regard, the Socimis were the great discovery of the year. Merlin and Hispania, the two largest Socimis by market capitalisation, spent €965 million on hotels, whereby accounting for 36.4% of the total volume invested in Spain.

In terms of Spanish investors, the Socimis and investment funds were followed by Spain’s hotel chains, which accounted for 13.5% of total investment. The Catalan hotel chains H10 and Hotusa were the most active in 2015. They were followed by private investors, such as family offices, which accounted for 8.9%.

In the meantime, overseas investors accounted for 26% of total investment in Spain, with buyers from France being the most active – Accor’s acquisition of four Novotel hotels was a key deal – behind those from Germany – IFA paid €48 million for two properties in the Canary Islands – and Hong Kong – Mandarin purchased the Ritz in Madrid, together with the Saudi group Olayan-.

By type of investor, the funds increased their weight significantly during the year, specifically, up from 30.4% to 53.6% of the total. Hotel groups and private investors lost steam, in contrast to the real estate companies, which recorded a slight rise.

The Canary Islands accounted for 29.6% of total investment, benefiting from the upturn that Spain’s tourism industry is experiencing at the moment due to (political) instability in other competing countries in the Mediterranean. 31 hotels were sold there in total, primarily as a result of the partnership between Meliá and Starwood Capital, as well as due to the creation of Bay, the first pure hotel Socimi, by Barceló and Hispania.

Recovery

Madrid was the second most popular destination, accounting for 23.5% of total investment. The price paid for the Ritz hotel – €778,000 per room – was the highest recorded in Spain. Half of the operations involved five-star hotels and 43% involved four-star hotels.

Occupancy rates have improved in the Spanish capital, but the average price there continues to fall below its pre-crisis levels.

In the Balearic Islands, hotels worth more than €445 million were sold – 16.8% of the total – , above Barcelona, where 14 transactions worth €340 million were signed – accounting for 14% – above all, involving four-star properties. Despite the moratorium imposed by the mayoress Ada Colau, the Catalan city is the country’s leader in terms of profitability and the outlook there is positive.

Another trend in 2015 was the sale of hotel portfolios. 78 of the 143 hotels that changed hands belonged to a larger batch. This year, more operations of this type are expected, albeit smaller in value; and overseas Socimis and investors are expected to play a more active role. According to JLL, investment in 2016 could reach similar levels to those seen last year.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Barceló, NH & Meliá Have Sold Assets Worth €1,000M In 2 Yrs

7 January 2016 – Expansión

The large Spanish hotel chains, led by Barceló, NH and Meliá, are continuing to slim down their real estate portfolios and to opt for lease and management contracts – over the last two years, they have sold assets worth more than €1,000 million with a dual objective: to clean up their balance sheets and to finance the growth and modernisation of their properties.

Barceló leads the ranking, by volume, thanks to the creation of the Socimi Bay together with Hispania. The hotel chain transferred 16 hotels and two shopping centres to the new entity in 2015. Hispania holds a 76% stake in Bay, having invested €458 million in the company. In parallel, between 2014 and 2015, Barceló sold other assets in the USA, Latin America and Spain – including the Hotel Barceló Santiago to the Chinese company Chongqing Kandge – for €212 million.

The intention of the group controlled by the Barceló family was to reduce its real estate exposure, which had reached a historical peak. The effect of these divestments has been partly offset by the purchase of its competitor Occidental, also in 2015. Currently, Barceló owns 45% of the 118 hotels that it operates.

Meanwhile, NH signed the largest divestment operation seen in the last two years. In 2014, it transferred the Spanish business of Sotogrande to Cerberus and Orion for €225 million. The hotel chain still has projects in Italy, Mexico and the Dominican Republic, but they may be removed from its portfolio in the medium term, given that it has now placed its focus on hotel management.

Strategy

Both NH and Meliá, whose strategy at the beginning of the crisis involved signing the highest number of low value transactions, is now seeking out juicier, more selective deals. Thus, last year, Meliá joined forces with the fund Starwood Capital to create a company to which it transferred seven hotels worth €176 million. The chain owned by the Escarrer family, which holds a 20% stake in the new company, will manage the hotels for 15 years. Moreover, it also sold the Calas Mallorca complex, which has 875 rooms, for €23.6 million.

Unlike NH and Meliá, which have chosen to replicate the Anglo-saxon model and reduce their real estate risk, other chains such as Iberostar and RIU are continuing their commitment to own their properties and so their divestments are happening in dribs and drabs. In 2014, RIU sold the Hotel Waikiki in Gran Canaria for €24 million and it sold Hotel Olivina in Lanzarote to Mazabi, which Iberostar now manages under its Olé brand. Last year, Mazabi also acquired two Iberostar hotels (the Santa Eulalia and the Costa del Sol) for €60 million.

Meanwhile, Iberstar’s last known divestment was made in 2013, when it transferred a hotel in Mallorca through a finance leasing operation. When that contract terminates, it will recover the ownership of the property, which it is continuing to manage.

In 2016, the experts expect that NH and Meliá will continue to carry the baton, but that there will not be any major operations, since their deleveraging has now been reduced. NH’s debt decreased by 16% between 2010 and September 2015. Meanwhile, Meliá’s debt, which exceeded €1,000 million in 2011, had fallen to €840 million by September (2015).

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Hispania Buys 4 Hotels In Gran Canaria For €75M

21 October 2015 – Expansión

Hotel assets are whetting the appetite of investors once again and proof of this is the firm commitment made by the real estate company Hispania for that kind of establishment. The company, which channels most of its investments through its subsidiary Socimi Hispania Real, has spent €780 million buying hotel assets, out of a total amount invested (including debt) of €1,300 million since the company debuted on the stock exchange in March 2014.

“Hotels have been strategic assets for us ever since we launched Hispania, because we already had experience in Azora – the managers of Hispania – which manages 12 hotels through a fund”, explains Javier Arús, Head of Hotels at Hispania.

The latest milestone in this strategy has been the purchase of five hotels through two operations. Firstly, it has agreed the acquisition of Hotel Holiday Inn in Madrid for €25 million. (…).

Secondly, the real estate company has also agreed to purchase four hotels located in Maspalomas, in the south of Gran Canaria, which together have 1,183 rooms. “We have been working on this deal since April 2014. It has been a very complex process, given that the company filed for bankruptcy in June. Now we have drafted a proposed agreement to purchase the debt from the creditors and recapitalise the company, and we are waiting for the legal confirmation”. Hispania will invest €75 million to acquire these establishments (three 4-star hotels and one 3-star) and will spend a further €9 million on their repositioning.

Bay

Following these transactions, the company in which George Soros and John Paulson hold stakes, will have more than 9,000 rooms, spread across both the urban and holiday segment. Many of these hotel apartments are owned by Bay, the Socimi that Hispania and the hotel chain Barceló have just launched, in which Hispania holds a 80.5% stake.

Nevertheless, some of the assets that Hispania owns outright could also be moved into the joint venture. “The Dunas portfolio – recently acquired in Gran Canaria – or Bahía Real – in Fuerteventura – may end up in Bay, since it would be logical for the whole holiday portfolio to end up in this company, some operations that must be approved by the Socimi’s Steering Committee”.

Currently, Bay owns 11 hotels, managed by Barceló, with 3,946 rooms, to which Hispania will soon add another five establishments also managed by its partner.

Hispania plans to continue on its shopping spree, despite the fact that there are many investors looking for opportunities in the Spanish hotel sector. “The market in Spain is very large and there has been very little institutional money until now, since investors used to be the hotel chains themselves. We will continue working to sign a couple more operations before the end of the year”, said Arús.

Between January and September, total investment in the hotel sector amounted to €1,273 million, up by 54%, according to the consultancy firm Irea, which forecasts that 2015 will surpass the record of €1,780 million registered in 2006. JLL estimates that that figure will reach €2,000 million. The experts in the sector agree that (this level of) investment will continue into 2016.

Original story: Expansión (by R. Ruiz and Y. Blanco)

Translation: Carmel Drake

Hispania Buys 80.5% Of Socimi Bay For €123M

20 October 2015 – Expansión

The real estate company Hispania and the hotel chain Barceló are pushing ahead with the launch of their Socimi Bay, dedicated exclusively to hotel assets. After signing a partnership agreement in April, Hispania closed the purchase of 80.5% of the company through its subsidiary, Hispania Real, for €123 million, yesterday. The remaining 19.5% is owned by Barceló. The consideration was paid entirely in cash, with an initial disbursement of €95 million paid in May as an advance.

Currently, Bay is the owner of 11 hotels – which are all operated by the Barceló Group through a rental contract – with 3,946 rooms in total, located in the Balearic Islands, Huelva, Almería and above all, the Canary Islands (three in Fuerteventura, one in Lanzarote and another one in Tenerife). Moreover, it is the owner of a shopping centre in Fuerteventura. These assets have a purchase price of €207 million and a current appraisal value of €229 million.

Having completed this first phase, the Socimi is going to incorporate five other hotels and one new shopping centre into its portfolio in a second phase, which is expects to complete before the end of 2015. These assets are valued at €227.5 million, which means that before the start of 2016, the Socimi Bay will have 16 hotels and two shopping centres worth €456.5 million.

In addition to its majority stake in Bay, the real estate company Hispania, in which George Soros and John Paulson hold stakes, also owns other assets worth more than €700 million, including several resort hotels with another 1,918 rooms. Hispania’s share price closed down 0.75% on the stock exchange yesterday at €12.52 per share. (…).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Hispania Acquires ‘Holiday Inn Bernabéu’ Hotel

14 October 2015 – El Confidencial

Hispania now has its own flagship building in Azca. The financial heart of Madrid has been one of the main battlegrounds for the large real estate companies in recent months, and their appetite means that there are now barely any opportunities left in the area. Nevertheless, the Socimi led by Concha Osácar and Fernando Gumuzio has managed to find a way in. (…).

The company has taken advantage of the voluntary bankruptcy filed in February by Leading Hospitality, owner of the Holiday Inn Bernabéu Hotel in Madrid and the Maza Hotel in Zaragoza, to take control of the company and, as a result, take over the reins of the only four-star hotel in Azca.

In reality, this transaction confers the Socimi ownership of just 52% of the establishment, since that is the stake held by Leading Hospitality in the property that houses the hotel. However, it has taken over 100% of the management of the property, which signed a 25-year franchise contract with IHG (InterContinental Hotel Group), an agreement that is still valid.

By sheer coincidence, the former owner of Leading Hospitality and the man who purchased the Holiday Inn Bernabéu, is an old acquaintance of Azora, the management company of Hispania. He is César Losada, the hotel businessman who also created the fund Losan Hotels World, now called Carey Value Added, which had the backing of the savings banks through Ahorro Corporación.

This investment vehicle ended up owning 14 hotels and 2,000 rooms, spread across the world’s main capital cities. The operation of these establishments was granted to brands such as Marriot, Steigenberger, NH Hoteles, Hotusa and Barceló. But the plans did not evolve as expected and in 2011, Azora received a mandate from Ahorro Corporación to take over the management of Carey and restructure it. (…).

Since its creation, Hispania has been clearly focused on the hotel sector and, in fact, it was a pioneer in the market with the creation of Bay, the first 100% hotel Socimi, which it launched together with Barceló back in February.

But, the entity managed by Azora also has its own hotel portfolio that sits outside of this vehicle; in fact, the first operation that it closed following its debut was the purchase of Hotel Guadalmina, another well known name in the tourism market, which it acquired through the back door and, on this occasion, by purchasing its debt.

That was only the starting point. Hispania is now the owner of NH Pacífico and NH San Sebastián de los Reyes in Madrid, Hotel Hesperia in Las Ramblas, in Barcelona, Gran Hotel Bahía Real and the Suite Hotel Atlantis Resort in Fuerteventura, Meliá Jardines del Teide in Tenerife, and Vincci Málaga.

In total, hotels account for 31% of the gross value of the Socimi’s asset portfolio; another 45% relate to offices and the remaining 24% relates to homes. Hispania’s hotel activity generated revenues of €3.25 million during the first half of this year. In total, the Socimi has 1,439 rooms, plus more than 300 rooms in the Holiday Inn Bernabéu and 6,097 rooms in the Bay portfolio.

Original story: El Confidencial (by R. Ugalde)

Translation: Carmel Drake

Irea: Hotel Investment Rose By 54% To €1,237M In YTDSept15

13 October 2015 – Expansión

Hotel investment is soaring in 2015. During the 9 months to September 2015, 77 transactions were closed involving 15,800 rooms, with deals ranging from the sale of hotels (already in operation) to the conversion of buildings into hotels. Investment volume amounted to €1,237 million, an increase of 54% compared with 2014, according to data published by the consultancy Irea.

Nevertheless, despite the record figures, the pace of investment slowed down during the third quarter, as a result of the election effect. In total, 14 transactions were closed between July and September, amounting to €196 million, compared with €699 million during Q2 and €342 million during Q1. Activity has been driven up by the sale of portfolios of assets, which accounted for 34% of investment volumes and 54% of rooms. The most noteworthy transaction in this category was the creation of Bay, the first pure hotel Socimi, by Barceló and Hispania; there was also the partnership signed between Meliá and Starwood Capital, with the aim of repositioning the Sol brand.

The sun and beach segment accounted for 68% of investments, with the Canary Islands leading the ranking as the star destination – €369 million was invested there. The Costa del Sol and Madrid also recorded significant increases, in contrast to Barcelona, where investment decreased by 15%, due to the impact of the hotel moratorium imposed by the city’s mayoress, Ada Colau.

By category, most of the transactions so far this year have involved 3-star and 4-star hotels, which has led to a decrease in the average price per room of €22,500, despite the rise in the number of rooms sold, which has increased from 6,192 in 2014 to 15,800 this year.

Socimis

In terms of the profile of investors, Socimis continue to lead the ranking. During the 9 months to September 2015, they invested €302 million, i.e. five times more than in 2014. Also noteworthy is the growing activity of international investors such as the Olayan Group (Saudi Arabia) and the Kangde Group (China), which have acquired the Hotel Ritz in Madrid and the Hotel Santiago de Tenerife, respectively.

Irea expects that 2015 will exceed the previous record registered in 2006 (€1,780 million) and that the level of investment will be maintained in 2016. Foreign Socimis and investors will continue to be the most active investors and hotel property groups are expected to start invested once again.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake

Hispania’s Hotel Socimi Evaluates Potential New Partners

14 May 2015 – Cinco Días

Bay, the hotel vehicle created by Hispania and Barceló, wants to strengthen its growth. The Socimi, which specialises in the Spanish holiday hotel segment, is seeking to expand its assets and obtain a critical mass with which to debut, first on the MAB, and then on the main stock exchange.

The head of the hotel sector for Hispania, Javier Arús, has acknowledged that the Socimi is interested in continuing its purchase of assets in the Canary Islands, the Balearic Islands and on the coast. For the time being, the vehicle owns 11 hotels and 3,946 rooms, expandable to 2,151 more, as the result of an agreement with Barceló, which has required an investment of €421 million. According to Arús, this amount (of total investment) will have to increase to €1,000 million to ensure the appropriate “critical mass” for floatation on the stock exchange.

A few weeks ago, Hispania revealed that it had secured €545 million to invest in assets after completing a capital increase, which involved the accelerated placement of 27.53 million shares. This financial muscle will allow it to make the upcoming purchases amounting to €200 million that it announced recently. Within the hotel sector, Hispania announced in November that it was in the advanced stages of studying a transaction amounting to €40 million involving a hotel asset in the Canary Islands with 700 rooms.

At a conference about hotel investment in Spain organised by Garrigues and Cehat (la ‘Confederación Española de Hoteles y Alojamientos Turísticos’ or the ‘Spanish Confederation of Hotels and Tourist Accommodation’, Arús said that Bay is (currently) analysing the entry of family hotel groups, either through cash or hotel assets. “There is a huge opportunity to grow in (terms of the number of) rooms”, said the executive, who pointed to the possible scaling up of Bay’s model within the Spanish holiday segment.

The investment vehicle created by Hispania and Barceló expects to own assets managed by different operators, not just the Mallorcan group. In fact, Arús revealed that Barceló is not expected to operate the next few hotels that the Socimi acquires.

As well as creating the Socimi with Barceló last year (and taking a 80.5% controlling stake), Hispania purchased the Hotel Melia Jardines del Teide for €36 million, two NH hotels in Madrid for €42.15 million and the Hotel Guadalmina in Marbella for €21.5 million, as well as a hotel from the Vincci chain. The company has not ruled out transferring these assets to Bay during the second half of this year.

Original story: Cinco Días (by L.S.)

Translation: Carmel Drake