Tag: consolidation

Hispania And Barceló Create A Resort Hotel Socimi

25 February 2015 – Hispania Press Release

Hispania and Barceló create a resort hotel Socimi (REIT) with 16 hotels and an initial targeted investment of 421 million euro.

The first investment will be the acquisition of 3,946 keys (11 hotels and 1 shopping centre) plus the option to acquire additional assets reaching more than 6,000 keys (16 hotels) and 2 shopping centres currently owned by Grupo Barceló

Hispania will invest 339 million euro for an 80.5% stake in the new company, which will become a subsidiary of Hispania

The new REIT will be the first hotel REIT exclusively focused on holiday resort, targeting a minimum of 12,000 keys in Spain

Hispania Activos Inmobiliarios, S.A. has communicated to the Spanish Stock Market Regulator, CNMV, that its subsidiary Hispania Real SOCIMI, S.A.U, (hereinafter “Hispania”) has signed an agreement with Grupo Barceló (hereinafter, Barceló) for the creation of the first hotel REIT focused on the holiday resort segment; an industry in which Spain is one of the leaders worldwide.

Part of this agreement includes the acquisition by Hispania in an initial phase of 11 hotels (3,946 keys) and 1 shopping centre. Later on, Hispania will have the option to acquire 5 additional hotels (2,151 keys) along with a second shopping centre. The agreement is subject to the successful completion of the due diligence process.

Once the transaction is completed and the option on the 5 additional hotels executed, Hispania will have invested 339 million euro, obtaining an 80.5% stake in the new REIT. Grupo Barceló will maintain 19.5% with the option to reach up to 49% through future capital increases.

Barceló will remain as the operator of the acquired hotels through lease contracts with an initial term of 15 years.

The valuation of the 16 hotels and 2 shopping centres amounts to 421 million euro. It is expected that the REIT, following the execution of the option, will have an initial equity of 187 million euro and a syndicated loan amounting to 234 million euro. Hispania’s capital contribution will amount to a maximum amount of 151 million euro (total attributable investment of 339 million euro).

The initial asset portfolio will have pro forma rental income of approximately 45 million euro (40 million euro pro forma 2014).

The Barceló assets included in this agreement comprise most of its resort portfolio in Spain, located in the Canary Islands, Andalusia and the Balearic Islands; touristic destinations which have had a strong performance during the last few years and are expected to continue consolidating their position in the future. Out of the 16 hotels, more than 90% of the rooms available are 4* category and are leaders in their respective influence areas.

Hispania and Barceló have agreed to invest together an additional 35 million euro in the short term in order to complete the repositioning and updating of some of the properties.

“Spain is the third most important touristic destination in the world, preceded only by France and the United States”, commented Concha Osácar, Board Member of Hispania. “Spain has almost twice the number of resort keys than the United States, as well as a well-diversified tourist base, with British, German and French visitors representing more than 50% of the total. This illustrates the opportunities which the industry offers in Spain”.

The agreement signed between Hispania and Barceló will allow them to start an ambitious plan focused on increasing the portfolio of the new REIT, through hotel acquisitions or incorporations of existing hotels. The purpose is at least, to duplicate the size of the initial portfolio, creating a Spanish resort portfolio managed by different leading hotel operators.

According to Concha Osácar, “our objective and that of our partner Barceló, is that the new entity becomes the first listed REIT focused solely on hotel resorts, with a diversified portfolio in terms of hotel operators, and a steady income base, through lease contracts with a strong fixed income component and enough exposure to the future increase of the Spanish tourism market. The objective of the new REIT for Hispania and Barceló, is to become an instrument with which to attract institutional capital for the Spanish hotel industry, creating new sources of capital for the hotel industry”.

From Barceló’s perspective, “as a result of this transaction, we are creating a solid alliance with one of the most active investors in the industry”. According to Barceló’s CEO, Raúl González, “after this transaction we will be in leading position to benefit from the concentration process that should take place in the Spanish hotel industry”.

Hispania has invested a total of 112 million euros, including capex for 2015, in 6 hotels (5 acquired in 2014 and 1 in 2015) managed by different hotel operators (Meliá, NH and Vincci), which could be included into the new REIT; this decision will be made by the partners during the second half of 2015.

Hispania will have invested 100% of the net proceeds raised

With this agreement, Hispania will have committed a total investment of c. 800 million euros in a total of 44 assets since its IPO on 14 March 2014.

Original press release: Hispania

Edited by: Carmel Drake

AEV Less Optimistic About Real Estate Recovery In 2015

4 February 2015 – Cinco Días.

House construction will not be revived until the upwards trend in prices grows stronger.

Analysts believe that the crisis “has cleaned up” the sector.

The macroeconomic recovery will come first, driven by increased activity and job creation, and then an improvement in the real estate sector. That is the expected path of recovery for the house building sector, one of those hardest hit by the recent crisis.

Paloma Taltavull, Head of the Department for Applied Economics at the University of Alicante explained this yesterday. She is one of the experts that has participated in a study conducted by the Spanish Association of Value Analysis (AEV), which represents more than 90% of the appraisers that operate in the market.

Thus, unlike the forecasters that resolutely claim that the real estate market will recover in 2015, the members of this organisation are much more cautious.

“Construction activity is still at historically low levels, with house prices now bottoming out, having been in decline since 2008”, state the conclusions of the study. However, for how long will prices remain at these low levels? That is the million-dollar question that all of the experts are asking themselves and to which investors, developers, vendors and buyers want the right answer. The problem is that getting the forecasts right with everything that still might happen seems, at the least, very complicated, according to the Chairman and Secretary of the AEV, Gonzalo Ortega and José Manuel Gómez de Miguel, respectively.

Two variables, in particular, always determine the future of this market: employment and access to credit. Although the official statistics for 2014 still need to be corroborated, it seems that there were more house sales in 2014 than in the previous year for the first time since the crisis began. And prices showed a clear trend towards zero growth or stabilisation.

Less property, more rent

And that was because last year was the first year in which Spain created jobs again, rather than destroying them. Moreover, financing terms were relaxed, thanks to the lowering of interest rates and the overall improvement in the banking sector.

However, according to the experts who prepared the AEV’s report, this recovery in employment is still insufficient to boost the housing market. Furthermore, the report highlights the “precariousness of the new jobs that have been created, along with wage deflation and mass youth unemployment” as the three most important factors that give us “few reasons to be optimistic”.

In this context, and given that the restrictive conditions surrounding access to credit for those that do not have a stable job and/or a certain level of income, the appraisers and experts at the AEV are unanimous in their view that “it will take a real and prolonged recovery for young people to be able to buy their own homes. Therefore, everything suggests that the majority of young people will opt to rent homes, whereby aligning with the European average”.

This is causing a build up in the back-log of demand from buyers, who still do not meet all of the requirements to make buying a house a reality. The appraisers’ report reveals that the most recent census data (2011) shows that almost 900,000 nuclei of new homes could have potentially been formed, but were not. If the improvement in employment continues, a large part of this potential demand will become effective and house prices will start to rise slowly as a result, “although we do not expect them to do so on a widespread basis or across the whole country until the end of this year”, predicted Taltavull.

And as for the construction of homes, the experience of past crises indicates that the return to previous levels of construction will be very slow over the next few years and will not become a reality until prices have recovered.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake