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

Chinese Conglomerate HNA Wants to Sell its Stake in NH Hotels

19 January 2018 – El Mundo

The largest shareholder of NH Hotels, the Chinese conglomerate HNA, is considering the possibility of divesting its stake in the Spanish hotel group. It has engaged the entities JPMorgan and Benedetto Gartland to identify possible buyers for its 29.3% participation in the Spanish hotel chain.

The Chinese investor group has submitted this information to the National Securities and Markets Commission (CNMV), explaining that it has engaged the aforementioned entities “to review its shareholding position in the NH Hotel Group”, which it holds through its company Tangla Spain, “which includes the identification of possible buyers for its stake”.

It was only a week ago that the Board of NH unanimously rejected the merger proposed by the Barceló group. This possible sale could be driven by the need for liquidity but the rejection decision may have precipitated the move by the Chinese firm.

The Chinese investor group had entered NH in 2013 with an initial participation of 20% through the subscription of a capital increase amounting to €234.28 million, which it increased to 29.5% in November 2015, after purchasing the 8.33% stake that the entity Intesa Sanpaolo held in the listed hotel chain.

Nevertheless, the disagreements arose shortly after its entry into the Spanish group’s share capital. The purchase of Carlson Rezidor, a rival of the Spanish hotel group in certain markets, resulted in the exclusion of the Chinese company from NH’s Board due to a conflict of interest. The letters confirming these disagreements were made public and the parties even came to a head in the courts.

HNA needs to obtain liquidity to pay off a debt that it took out in 2015, after carrying out several acquisitions worth USD 40 billion (€32.65 billion). And in December, it announced its intention to sell assets worth US 6 billion (€4.897 billion).

By the middle of November, the Asian conglomerate had sold 1.14% of its share capital in the Spanish hotel group, which meant divesting 4 million shares, whereby obtaining some liquidity.

Based on the current composition of NH’s shareholders, HNA is followed by the investment fund Oceanwood, with 12%, and the Hesperia Investor Group, with 9%.

Original story: El Mundo (by Silvia Fernández)

Translation: Carmel Drake

RIU to Invest €2.5bn in New Hotels & Refurbishments Between Now & 2022

16 January 2018 – Expansión

RIU will spend €650 million this year on the refurbishment, construction and purchase of hotels, and will make investments of €2.5 billion in total between now and 2022, according to explanations provided yesterday by the group’s Director of Sales and Marketing, Pepe Moreno.

In this way, the Mallorcan chain is accelerating the rate of investment seen over the last five years, in which it committed to undertake investments amounting to €1.95 billion. Specifically, the company reached a record last year with investment of €600 million, which was €200 million more than forecast at the beginning of the year.

During 2017, RIU opened two new hotels – the RIU Dunamar in Costa Mujeres (México) and the expansion of the RIU República de Punta Cana– and it refurbished five hotels in their entirety. Moreover, in June, it purchased Edificio España from Grupo Baraka for €272 million.

RIU recorded revenues of €2.156 billion in 2017, up by 7%, and closed last year with 92 hotels, 43,135 rooms and 28,894 employees.

In 2018, the chain plans to open four hotels and undertake five major refurbishment projects.

In terms of the focus for growth, RIU wants to continue strengthening its urban business, which it inaugurated in 2010 with a hotel in Panama, and which nowadays includes six operational hotels. Moreno said that the company will continue to analyse opportunities in the main cities of North America, Latin America, Europe and Asia.

The RIU urban brand has two new projects underway: the first urban hotel in Spain, located in Edificio España (Madrid), which is expected to open its doors at the beginning of next summer (2019) and its second hotel in New York, on which work is underway, very close to Times Square, which will also be inaugurated in 2019.

In addition, the chain wants to grow in Asia, where it already has two projects under construction, in the Maldives and Dubai.

Moreno said that RIU will continue to bet on growing its owned hotels – the firm currently owns 84% of the hotels in its portfolio – and he said that the chain is not interested in growing inorganically or debuting on the stock market.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

Irea: What Led to Last Year’s Record Inv’t in Spain’s Hotel Sector?

12 January 2018 – Hosteltur

Last year saw investment in the Spanish hotel sector break all records, with investors spending €3.907 billion on transactions involving existing hotels, properties for conversion into hotels and land for the construction of hotels. That figure represents an increase of almost 80% with respect to 2016, according to Miguel Vázquez, Managing Partner of the Hotels Division at Irea; and was the result of the sale of 182 establishments comprising 28,813 rooms, with an average price per room of €119,000, compared with an average price per room of €92,000 in 2016 and of €85,000 in 2015, which represents an increase of 40% in just two years (…).

According to the Irea Director, this investment boom was driven “not only by the greater number of operations but also by the fact that the prices of the assets sold were higher as they were coming onto the market after being repositioned in recent years. The types of investors have also changed, as have their demands in terms of returns: around 5-6% in the urban segment and around 6-7% in the holiday segment, given that we are no longer seeing as many opportunistic funds entering the market (…)”.

In fact, he has quantified that “more than 2,000 holiday hotels still need to be renovated and repositioned. There is a wide range of opportunities that the funds are focusing on, in search of agreements with small chains at times of generational changes and when they are interested in selling…or not, because the strong buyer pressure is continuing to motivate owners who are not typically sellers to put their assets on the market, especially independent operators. And that is leading to the entry into the market of large holiday hotel portfolios, which is what investors are backing Spain for, as well as independent hotels”.

Forecasts for 2018

And after “the stratospheric data of 2017”, in the words of Vázquez, “the inertia with respect to 2018 is very positive, the year is starting off very well”, although he thinks that hotel investment will moderate and “the effect of the uncertainty in Cataluña will make it very difficult for us to see a repeat of last year’s figures”.

Nevertheless, he cites three operations that should be resolved during the first few months of this year: the completion of the purchase of the Alua portfolio by Hispania (…); the sale of a portion of the Ayre hotel portfolio, which is currently on the market; and the launch of a hotel Socimi by a financial entity with 15 establishments, which could take place soon.

Vázquez estimates that the investments already committed for the first few months of the year identified by Irea amount to €4 billion, comprising mainly new build projects, taking advantage of the increase recorded in the purchase of land for the construction of hotels, with operations in Bilbao, San Sebastián, the south of Tenerife, Barcelona and Sevilla.

In terms of the strengths in the market, besides the repositioning of hotels that is leading to an improvement in competitiveness and the appeal of Spain as a destination, the Director highlighted “the magnet effect of qualified investors such as Blackstone, which are reinforcing Spain as a destination for hotel investment” (…).

Weaknesses: overheating

Vázquez highlighted the overheating of prices that is happening in destinations such as the Canary Islands, where the average (sales) price per room has increased to €152,000, compared to the national average of €119,000, although, it should also be taken into account that “the operation that carried the most weight in terms of those figures was Sabadell’s sale of HI Partners to Blackstone (…), involving high quality, repositioned hotels, which increased prices”.

In fact, the most expensive prices were recorded in Barcelona and Madrid, which holds the record for the sale of the most expensive room with Operación Canalejas, for approximately €1.4 million, whereby exceeding the figure of €1.2 million recorded during the sale of Hotel Villa Magna (…).

In the Balearic Islands, as the director acknowledges, “there is still more margin because there are a lot of hotels there that still need repositioning and, although there is price inflation, it is not as marked as in the Canary Islands, which benefit from having year-round demand and five years of high occupancy rates, which drives up prices”.

Original story: Hosteltur

Translation: Carmel Drake

ECI & Matutes Negotiate the Sale of Ayre Hotels for €200M

12 January 2018 – Expansión

Advanced conversations / The retail giant and hotel chain want to cash in on the sale of a hotel portfolio comprising five establishments and more than 800 rooms.

El Corte Inglés and Grupo Matutes want to take advantage of the good times that the tourist sector is enjoying and the investor appetite for the real estate market to sell some of the assets in the Ayre chain – a brand of urban hotels, which they jointly control (50:50) – and make some money.

Specifically, the groups are finalising the sale of a portfolio comprising five hotels, with more than 800 rooms, located in Madrid, Barcelona, Oviedo and Córdoba, worth around €200 million, according to sources in the sector. Those sources indicate that the two companies have already received several offers and that the operation could be closed during the first quarter of the year.

Ayre was created in 2006 as the urban brand of the Palladium Hotel Group – then known as Fiesta and belonging to the Grupo Empresas Matutes (GEM) –. At the end of that year, El Corte Inglés purchased a 50% stake in the chain, through Parinver, its holding company. The retail group classified that acquisition as an operation of a financial nature at the time.

Currently, the urban chain Ayre owns 10 hotels in Madrid, Barcelona, Sevilla, Valencia, Córdoba and Oviedo. Last summer, the companies decided to put half of the assets up for sale and reposition at least two of the other establishments – the hotels in Valencia and Sevilla – under the Only You brand, the premium sub-brand of Ayre.

The company that owns Ayre is FST Hotels, controlled equally by Fiesta Hotels & Resorts (Grupo Matutes) and Parinver (El Corte Inglés). FST Hotels, which is headquartered in Palma de Mallorca, closed 2016 with turnover of €49.4 million, up by 14% and a net profit of €4.2 million, up by 100% compared to 2015, according to the most recent accounts filed with the Commercial Registry.

The President of the Company is Abel Matutes Juan, whilst Florencio Lasaga, the director of El Corte Inglés and President of the Ramón Areces Foundation (its largest shareholder) serves as the Vice-President. FST Hotels also has Jesús Nuño de la Rosa, the CEO of El Corte Inglés, on its Board, as well as Carlos Martínez Echevarría and Cristina Álvarez Guil, both directors of the retail group; and Abel Matutes Prats, Director General of Palladium, amongst others.

The operation forms part of the strategy of Grupo Palladium, whose objective is to grow through hotel management, and move from being an owner to a manager, in line with other Spanish chains. Palladium, which is headquartered in Ibiza and is more than 40 years old, has 50 hotels in six countries – Spain, Mexico, Dominican Republic, Jamaica, Italy and Brazil – and operates three other brands besides Ayre: Palladium Hotels & Resorts, Fiesta Hotels & Resorts and Ushuaïa.

Meanwhile, El Corte Inglés would add the sale of this hotel portfolio to the list of non-strategic divestments that the group has undertaken in recent months: in November, it reached an agreement with the fund GPF to sell it the management of its Motortown workshops, located in 55 of its shopping centres; in October, the company chaired by Dimas Gimeno sold 40% of Torre Serrano to Infinorsa for €50 million; and in September, it sold off a logistics warehouse in La Bisbal del Penedès (Tarragona). The group has also sold buildings in Madrid, Barcelona and Sevilla, amongst other cities, in recent months.

Original story: Expansión (by R. Arroyo and V. M. Osorio)

Translation: Carmel Drake

Hispania Receives a €100M Loan from EIB

12 January 2018 – Expansión

Hispania has signed a loan with the European Investment Bank (EIB) for €100 million to update its hotel portfolio and bring its assets in line with better technical standards, including energy efficiency measures.

Specifically, the investment will be used to improve tourist accommodation that the Socimi controlled by George Soros owns in tourist regions such as the Canary Islands and Andalucía.

The EIB is the European Union’s long-term financial institution, which grants long-term loans to investment projects aimed at promoting the implementation of EU objectives.

The loan to Hispania contributes to improving the competitiveness of the Spanish hotel sector, according to the EIB, through the incorporation of technical standards at its facilities. In this way, the investment supports the growth of less developed regions, where most of the hotels are located, explains the institution.

Hispania whereby joins Axiare, which received €16 million from the EIB last month to improve energy efficiency and the general features of its buildings with the aim of making them more sustainable.

Largest owner

Hispania is currently the largest owner of hotels in Spain with more than 13,100 rooms across the country.

At the end of last year, the company agreed to purchase the remaining 24% stake in BAY from Barceló for a total of €172.4 million. Moreover, it acquired Hotel Barceló Guadalmina from the Mallorcan hotel chain for €19 million. With these acquisitions and the investment plan to improve and reposition its portfolio, Hispania committed all of its financial capacity at the end of last year.

In February, the Socimi, in which George Soros holds a stake, announced its intention to maintain its initial objective of selling all of its assets before March 2020, the date that will mark six years since its debut on the stock market.

Original story: Expansión (by R. A.)

Translation: Carmel Drake

Spring Hotels Buys 62,000 m2 of Land in Tenerife for €85M

10 January 2018 – Eje Prime

The Spring Group now owns four hotels in Tenerife. The Canarian company, based in the tourist town of Arona, has invested €85 million in the purchase of 62,000 m2 of land its home municipality, where it is going to build a 525-room hotel.

The establishment will be located in the El Mojón area, in Los Cristianos, and will allow the chain to increase its offer on the island, where it already owns three other assets: Arona Grand Hotel, Vulcano and Bitácora.

The island group hopes to obtain the construction licence within the next few months in order to start work on the construction of the hotel as soon as possible. This new land purchase forms part of the investment plan that the company has underway. It has already spent €30 million on the complete renovation of its other establishments.

Original story: Eje Prime

Translation: Carmel Drake

Deloitte: Tertiary Real Estate Inv’t Amounts to €9.7bn in 2017

27 December 2017 – Expansión

An increase in property prices has led to a 22% reduction in the purchase of non-residential assets in 2017 with respect to 2016.

The boom that has marked the real estate investment sector in Spain since 2014 is starting to show signs of slowing. That is according to the most recent non-residential investment figures, which, with just a few days to go before year-end, are reflecting a decrease of 22% with respect to 2016.

According to a market study performed by Deloitte Real Estate, investors spent €9.7 billion this year on tertiary properties (offices, hotels, commercial and logistics assets) compared with €12.4 billion in 2016 and €11.8 billion in 2015.

“With just a few operations still left to close before 31 December, which will amount to between €0.5 billion and €0.6 billion, tertiary investment has fallen by 22%. This decrease in activity is a sign that we have crossed the equator of the bullish cycle and that we are possibly starting a period of greater stability”, explained Javier García-Mateo, Partner in Financial Advisory at Deloitte.

The 22% decrease is due to a weaker second half of the year in terms of the rate of investment (…). During the third quarter, investment fell from €6.6 billion in 2016 to €1.6 billion this year, says Deloitte in its report. During the fourth quarter, the difference was a decrease of 42% (€2.8 billion compared with €1.8 billion). The decrease is more pronounced in the property segments that tend to lead absolute investment, namely, offices and retail assets. In the case of the former, investors have spent €2.3 billion in 2017, less than half the amount recorded in 2016 (€4.9 billion) and 2015 (€5.3 billion) (…). “Offices tends to be the segment that traditionally leads investment, but this year it has decreased by 55%. This is not due to a lack of supply, but rather the gap between the expectations of sellers and the offers from buyers. Moreover, some operations have been abandoned, such as the sale of Hispania’s portfolio”, said García-Mateo.

In this way, unlike in previous years, where large operations were closed during the final quarter of the year, such as Torre Foster – sold for €490 million at the end of 2016-, Torre Espacio – sold in November 2015 for €550 million – and Torre Picasso – sold for €400 million in December 2011 – this year, the most significant operation has been the sale of 50% of Torre Caleido on Paseo de la Castellana, for around €150 million, closed during the first quarter of the year.

In the case of retail assets, investment in shopping centres fell by 29% to €2.7 billion, despite record operations such as the one involving Xanadú, whilst the purchase of shops fell by 36% to €421 million.

“After 4 years of increases in valuations and the consequent decrease in yields, investment in offices and retail property is significantly less attractive than in the hotel and logistics segments, where there are up to 3 points of differential per year”, say the sources at Deloitte. The large hotel operations this year have included the purchase of Edificio España by the Riu Group and the sale of HI Partners, along with its 14 establishments, by Banco Sabadell to Blackstone for €630.73 million.

Cataluña

The 22% decrease comes at a time that is being characterised by the independentist challenge in Cataluña, although the uncertainty being generated in that region does not seem to have had an impact on real estate investment, at least not yet, according to García-Mateo. “In Cataluña, the absorption of office space has fallen and sales in shopping centres have also decreased, by around 10% with respect to Q4 2016, but investment has not been hit, as evidenced by Meridia Capital’s recent purchase of the Barnasud shopping centre and Invesco’s acquisition of the Mango facilities in Palau de Plegamans (Barcelona)”, he added.

In this way, the experts justify that the decrease in investment is due to a change in the cycle, following four years of rapid growth (…).

Nevertheless, the €9.7 billion spent during 2017 represents the fourth-highest figure in the historical series (dating back 13 years).

It was only in the last two years, as well as in the record year for the sector (2007), when investment amounted to €12.6 billion, that investment in non-residential assets exceeded the €10 billion threshold, according to Deloitte.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Idealista: Hotel Inv’t to Reach Record Figure of €3.2bn in 2017

26 December 2017 – Idealista

The year-end forecasts for hotel investment are marking record highs, exceeding the €3.2 billion threshold. This represents an increase of 45% with respect to 2016 and of 25% with respect to 2015, the record year to date when investment amounted to €2.55 billion. The large operations completed during the year include the 14 assets (HI Partners) that Sabadell sold to Blackstone for €630 million and the purchase of the iconic Edificio España building (pictured below) in Madrid by the hotel chain Riu for €380 million.

The hotel segment has risen to prominence in 2017 in terms of real estate investment, accounting for 30% of the total market share, exceeded only by retail. During the first six months of the year, €1.655 billion was invested in hotel purchases.

Madrid and Barcelona are the two cities that recorded the majority of the real estate operations: the Spanish capital accounted for 19% of total investment and the Catalan capital 12%. Nevertheless, markets such as Valencia, Sevilla and Bilbao also started to spark interest amongst investors. Meanwhile, in terms of holiday markets, the Canary Islands, Andalucía and the Balearic Islands led the investment ranking, accounting for 23%, 13% and 9%, of the total investment, respectively.

Between January and November 2017, 94 operations were closed, with 109 hotels changing hands. The most significant operation was completed by Blackstone, with its purchase of the HI Partners portfolio from Sabadell (…).

Another important deal was closed in June with the sale of a portfolio of 3- and 4-star Meliá Hotels, located in Ibiza, Lanzarote, the Balearic Islands and Torremolinos to London & Regional for €230 million.

In 2018, the investment figures in the hotel sector could soar once again if Barceló’s plan goes ahead to take over the NH Hotel Group, worth €2.48 billion. That deal would create a new market leader with more than 600 hotels and 109,000 rooms.

Original story: Idealista 

Translation: Carmel Drake

Bankinter Prepares to Debut its Hotel Socimi in Q1 2018

26 December 2017 – El Confidencial

Bankinter has started to offer its private banking clients the option of acquiring a stake in a listed real estate investment company (Socimi) that owns a portfolio of 4- and 5-star hotels located across Spain, which it plans to debut on the stock market during the first quarter of 2018.

This Socimi will be created with a share capital of almost €200 million invested in a selection of hotels: 65% holiday establishments and the remainder urban, including several properties operated by high-profile chains such as Marriott and Meliá, according to reports made today by sources close to the project.

In recent weeks, Bankinter has been in charge of choosing the hotels, all of which are operating, in order to offer an annual dividend of approximately 5% to all of the shareholders of the Socimi, which will make its debut on the MAB, the stock market segment designed for SMEs.

The main shareholders will be Bankinter’s private banking clients, who have already pledged to contribute around €120 million to the project on 18 January. The minimum investment per client will be €200,000 and the maximum will be 15% of each individual’s financial wealth.

In addition, other investors, including Bankinter itself, the manager of the Socimi and institutional investors, will invest at least €60 million more.

The idea is that the bank led by María Dolores Dancausa will invest €18 million and the manager of the Socimi, GMA, €9 million, which would mean that both will hold a minority stake in the company, but one that is sufficient to entitle representation on the Board of Directors.

Unlike other Socimis, the investment vehicle designed by Bankinter has a divestment period of 7 years, although the bank reserves the right to extend its life.

This Socimi is not the first to be launched by the financial institution, given that in February, it placed Ores on the market, together with the company Sonae Sierra. Ores invests in commercial assets such as shops and large retail spaces in Spain and Portugal.

Original story: El Confidencial 

Translation: Carmel Drake