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

Alchemy & Former Orizonia Director Create Hotel Group

5 October 2015 – Expansión

A new player has emerged in the Spanish hotel sector: Feel Hotels Group. The project has promoted by the fund Alchemy Special Opportunities and Javier Águila, the former Director of Orizonia, has just closed its first operation: the purchase of six hotels in Mallorca and Ibiza. This batch of assets, which belonged to Marina Hotels until now, comprises 1,200 rooms.

The acquisition, for an undisclosed sum, represents this hotel group’s debut in the market. Alchemy is the majority shareholder of the company, in which Águila also holds a stake. Águila is the CEO and leads a team with extensive experience in Spanish hotel chains, including Iberostar, Luabay and Bahía Principe, amongst others. Meanwhile, Alchemy, which has invested around €4,000 million (in various initiatives) since its launch in 1997, has been analysing opportunities in the hotel sector in Spain for a while; it has already invested in this sector in the past in the UK.

Four star properties

Feel Hotels Group will take over the management of the hotels from the beginning of 2016 and will invest €15 million modernising the facilities. The refurbishment of the six 3-star and 4-star properties, will be undertaken in 2016.

The chain will focus on the sun and beach segment and on 4-star hotels, although it does not rule out the possibility of acquiring a few lower grade or luxury establishments. Initially, it is targeting the main tourist areas in Spain, including the Canary and Balearic Islands, as well as the mainland coast and the south of Portugal. In the medium term, when Feel Hotels Group has secured a critical mass, it will expand its focus overseas.

The group’s route-map envisages that it will build up a portfolio of between 20 and 25 properties over the next four years, through the purchase of more hotels and also, by securing lease and management contracts. If these figures materialise, and depending on the size of the properties, Feel Hotels Group can expect to generate revenues of around €100 million.

Brand

The commercial launch of the chain is scheduled for early next year. However, the name of the company itself, Alchemy, is being used for the time being. The management team has not yet decided whether it will use Feel Hotels Group as the brand of the hotel chain.

Interest from international funds and investors in taking positions in the holiday hotel sector has intensified in recent months. At the end of April, Brussels authorised the partnership between Meliá and Starwood Capital, whereby the fund acquired 80% of seven hotels in the Canary Islands, Balearic Islands and Costa del Sol, with almost 3,000 rooms, for €176 million. Meliá will continue managing these establishments.

Meanwhile, Barceló sold the Hotel Barceló Santiago (Tenerife) to the Chinese group Chongqing Kangde Industrial, with whom it had been negotiating since 2013, for €50 million. In parallel, Barceló created the first hotel-only Socimi, with 16 holiday establishments.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake