The Gran Hotel Velázquez, on Sale for More Than 60 Million Euros

2 March 2016

The Salazar family continues its process of selling off hotels, one that began in 2014 with their eviction from the Hotel Ada.

Madrid’s hotel market is at a fever pitch. This Tuesday, the sale of the Villa Magna hotel, on the Paseo de la Castellana, to the Turkish Dogus Group was announced. Just 300 meters from the Madrid’s central avenue, another well-known property has come on the market. The Gran Hotel Velázquez is up “For Sale,” asking for more than 60 million euros.

Owned by the Corporación Hispano Hotelera (which is in turn owned by the Salazar family), the investors who have made offers for the property have been rebuffed by the family, which is nevertheless beset by debts. “They are asking for approximately 62 million euros”, sources in the real estate sector explained to 02B. Meanwhile, those same sources believe that a fair price for the asset would not exceed €35 to 40 million.

An old-fashioned property

Although the location and the building are very attractive, it would be necessary to adapt the building, bringing it up to modern standards. Some call it “old-fashioned.” Others added that the property could be called, “vintage, if not just old.” The 435,000 euros per room requested by the Salazar brothers would require significant additional investments to remodel the establishment.

At first, the owners of the Gran Hotel Velázquez confirmed that the property has been on sale “for a while.” However, other sources at the firm then stated that they had no information on the possible sale and that any statements to the contrary were “rumours.”

The hole of the Salazars

The Salazar brothers have been divesting themselves of their hotels since 2014. In May of that year, they left the Ada Hotel – currently owned by Único Hotels – evicted for failure to pay rent to Real Gran Peña. A year later, in March, the Hotel Maria Elena went to Hotusa while Asturias went to Platinum Estates in May.

The former owners of SOS Cuétara, the current Deoleo, are awaiting a court appearance regarding fraud allegedly committed in 2008. A €213-million loan ended up on the balance sheet of another the group’s company. For that, a judge confiscated their passports and imposed a fine of 93 million euros. Also, the magistrate seized its assets to guarantee a €360-million security.

A hotel bubble

The Gran Hotel Velázquez is just one example, but prices have skyrocketed in Madrid. “A bubble is forming,” warns Bruno Hallé, a consultant at Magma HC. “Threats of a possible moratorium generate uncertainty and consequently the value of real estate increases.” Also, growth is not commensurate with the pace of occupancy and prices in the capital.

Meanwhile, an investor says: “They’ve put this price on to see if someone bites.”

Original Story: Cerodosbe – Carles Huguet

Translation: Richard Turner


Bankia Will Get Best Price For Its Stake In Realia Regardless Of Who Wins Bid

9 March 2015 – Expansión

Battle for the real estate company / Slim has committed to pay Bankia the difference between the price agreed for the purchase of its 24.9% stake and the eventual winning bid.

Bankia will win regardless (of who turns out to be the evenutal victor) in the takeover war being waged by Carlos Slim and the Socimi Hispania Real for Realia. The financial institution, a historical shareholder in the real estate company, together with FCC, will obtain the same profit as the other shareholders, despite having sold its stake to the Mexican tycoon last Wednesday.

According to information submitted by Inmobiliaria Carso to the CNMV, the company controlled by Slim has guaranteed Bankia a payment to cover the difference, if the evenutal successful offer (price) for Realia is higher than the amount received by the bank.

The entity chaired by José Ignacio Goirigolzarri sold Slim the 24.95% stake that it held in Realia for €0.58 per share, and therefore it received €44.48 million. The offer exceeded the only firm acquisition proposal made up until that point by 18%, which had been submitted by the Socimi Hispania; its offer for 100% of Realia amounted to €0.49 per share.

Both proposals fell significantly below the average trading price of Realia’s shares on the stock exchange. On Friday, after Expansión published that Slim was negotiating an agreement with Hispania to take control of the real estate company, its share price decreased by 3.33% to €0.725, bringing its market capitalisation to €222.8 million.

Hispania’s takeover bid values Realia at just over €150 million, compared with Slim’s offer, which places a value of €178 million on the company.

Both takeover bids are voluntary in nature. Nevertheless, the CNMV may force both candidates to improve their respective offers and bring them closer to the average share (trading) price recorded in recent months. That happened in the case of Deoleo, when the regulator forced the venture capital fund CVC to increase its offer from €0.38/share for the oil group to €0.395/share. On that occasion, the fund also extended the higher bid price to the financial institutions from which it had previously purchased shares in Deoleo.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake