Tag: hotel debt

Sabadell Engages Lazard To Evaluate Future Of HI Partners

29 August 2017 – Expansión

Banco Sabadell is studying the best solution for its hotel manager HI Partners. To this end, the financial entity has engaged the investment bank Lazard to analyse the private sale of its subsidiary or to search for a shareholder to acquire a majority stake in the company, according to market sources.

In this way, Sabadell is opening a window of opportunity to those who may be interested in taking full or majority control of its hotel management company, whilst it continues, in parallel with the IPO of the same entity.

These two options will allow Sabadell to make cash on the one hand and undo its positions, taking advantage of the current investor appetite in the real estate sector and, specifically, the interest in hotel assets, and secondly, to find a partner to take a majority stake and whereby deconsolidate the business from its balance sheet.

The operation, known in the market as a dual-track deal, allows the company to launch a sale and the search for interested parties in parallel to and at the same time as it undertakes the stock market debut process.

In this way, Lazard’s commission is independent of the contract that HI Partners signed to evaluate the feasibility of listing the company on the stock market.

Opportunities

Sources at the bank consulted by Expansión have indicated that this represents a “very preliminary sounding out” of the various deconsolidation and value-generating options. (…).

In this sense, the CEO of Sabadell, Jaime Guardiola, said during the presentation of the bank’s most recent results that the vocation of the financial entity is not to remain as managers over the long term: “we want to exit and we have a very good opportunity ahead of us”, he explained.

HI Partners is led by Alejandro Hernández-Puértolas (pictured above centre), CEO of the company, who, together with Sergio Carrascosa (pictured above left) and Santiago Fisas (pictured above right), two other former executives of Reig Capital, comprise the management team.

The group was created in 2015 following the transfer of around twenty hotels by Banco Sabadell. The financial entity had foreclosed those assets during the crisis following the non-payment of debts. Moreover, HI Partners is responsible for managing the bank’s hotel debt.

IPO

To control these assets, the hotel investment and management arm of Banco Sabadell created two companies: one to hold the best hotels in the chain, HI Partners Holdco Value, and another containing smaller hotels in secondary locations, HI Partners Holdco Gestión Activa, with the intention of improving their management to then sell them on.

For the time being, Sabadell is not ruling out any of the options and is continuing to analyse the debut of its hotel management and investment subsidiary on the stock market.

Before the summer, the bank engaged the investment banks Citi, JPMorgan and Credit Suisse to sound out the market and analyse the feasibility of listing its hotel management subsidiary on the stock market (…).

In the event that the bank decides to debut the company on the stock market, the operation will focus on the company that controls the most strategic assets: 14 high-end hotels located in the main tourist areas and which, as at 30 June, had a combined appraisal value of €689 million, with more than 3,700 rooms in the portfolio.

Original story: Expansión (by R. Arroyo and J. Orihuel)

Translation: Carmel Drake

Sabadell Considers Listing HI Partners As A Socimi

29 May 2017 – Eje Prime

A new IPO may be on the horizon for the real estate arm of one of the large Spanish banks. Banco Sabadell is analysing the option of debuting its subsidiary HI Partners, through which it owns a portfolio of 31 hotels across Spain, on the stock market as a Socimi.

According to Expansión, the bank has engaged the investment banks Citi, JP Morgan and Credit Suisse to study the feasibility of the placement, whose final green light will depend on the entity’s President, Josep Oliu. The eventual debut on the stock market could take place after the summer.

Led by Alejandro Hernández-Puértolas and chaired by Enric Rovira, HI Partners was founded in 2015 by Sabadell to enable the Catalan entity to concentrate the ownership of the real estate assets linked to the tourist sector that it obtained as a result of foreclosures, into a single company. Through two companies, HI Partners Value Added and HI Partners Gestión Activa, the firm now owns 31 hotels with more than 3,500 rooms, which are managed by various hotel operators.

The group’s assets include establishments in Tenerife (the Hotel Jardín Tropical), Marbella (Incosol), Sitges (Terramar), Valencia (Acteon), Málaga (an establishment run by the hotel chain Silken) and Mallorca (the Hilton Sa Torre). In addition, HI Partners manages €800 million of the bank’s hotel debt.

Original story: Eje Prime

Translation: Carmel Drake

Santander & Apollo Call Off Altamira Negotiations

30 December 2016 – Vozpópuli

Santander’s repurchase of Altamira has run into trouble.

After months of to-ing and fro-ing, Banco Santander and Apollo have decided to call off their negotiations regarding the possible sale of the 85% stake that the US fund owns in the real estate company. And the reason is price, given that Ana Botín is not willing to meet the expectations of the asset manager chaired by Leon Black. Apollo will not drop its asking price below €1,000 million, whilst Santander’s informal offer amounts to around €800 million, according to several financial sources.

Unless there is a last minute change of heart, all indications are that Altamira’s share capital structure will continue as it is now: with 85% in the hands of Apollo and 15% controlled by Santander. The Spanish bank sold the controlling stake in the real estate company in 2013 for €664 million.

Santander’s intention was to repurchase its stake to create a world-leading property management firm, to administrate its assets in other countries where the default rate is rising, such as in Brazil. Santander engaged Citi to complete this operation. The possible repurchase has been on the table since Ana Botín (pictured above) took over as President of the bank, given that this sale was one of the things that she liked the least from her father’s inheritance.

Botín sees it as a much more expensive way of raising capital than would have been possible to obtain by other means. But unless she can afford a price that will allow Apollo to close this deal at a profit, it is unlikely to go ahead. This change in strategy comes at a time when Apollo is raising a new fund, amounting to more than €4,000 million, to invest in the south of Europe. Given that it has new ammunition to spend from now on, it will value a platform such as Altamira very highly

New strategy

Following this turnaround in negotiations, Apollo has decided to strengthen the future of Altamira be making acquisitions. Santander’s property management firm is well placed in two current acquisition processes: firstly for Unicaja’s real estate arm, GIA, where it is competing with Haya Real Estate; and secondly, for the first bad bank created by the Portuguese State, Oitante, which manages Banif’s problem assets – other players such as Servihabitat (owned by TPG and CaixaBank), Hipoges and Värde Partners (Banco Popular’s real estate shareholder) are also bidding in that tender.

If the latter operation bears fruit, it would be Altamira’s first international venture, and the ideal way for Apollo to generate value from this investment, and obtain more from its sale when it eventually decides to exit.

The fund chaired by Black (one of the 150 wealthiest people in the USA and owner of the painting The Scream) is putting all of its meat back on the grill in Spain after a couple of less active years. In 2013, it closed its largest two acquisitions in the country: Altamira and Evo Banco. Since then, its activity has been limited to the purchase of a small portfolio of homes from BMN and GE Capital’s mortgage portfolio in Spain. Moreover, Altamira was awarded one of the four management contracts by Sareb.

In recent months, Apollo has purchased one of the largest banking portfolios on the market, Project Sun from CaixaBank, containing hotel debt, and it is expected to soon close the acquisition of one of the aforementioned real estate platforms (Oitante or Unicaja).

Original story: Vozpópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Sabadell To Invest €450M In Its Hotel Arm

4 December 2015 – Expansión

Hotel Investments Partnership (HI Partners), the hotel management and investment arm of Banco Sabadell, is backing itself forward to become one of the main players in the Spanish hotel sector. The firm wants to become one of the largest hotel owners in Spain, involving itself in the management of hotels and improving their income statements. “There is a significant opportunity in the market for the creation of large portfolios of hotel assets”, says Alejandro Hernández-Puértolas (pictured above, centre), CEO of HI Partners.

The company will invest €450 million over the next three years to refurbish and increase the value of its hotels, an amount that will be completely financed by Sabadell during this first phase.

The bank controls 99% of the company’s capital and Hernández-Puértolas and two other partners, Sergio Carrascosa and Santiago Fisas (pictured above, left and right, respectively), own the remaining 1%. Enric Rovira, Deputy CEO of the Sabadell, is the President of HI Partners, which has a dedicated team comprising 22 professionals and is managed independently of the bank.

Creation of two vehicles

Sabadell transferred 22 hotels with 1,600 rooms to HI Partners, after it had accumulated them on its balance sheet during the crisis as the result of foreclosures due to unpaid debts. Moreover, the entity has entrusted the team with the management of a portfolio of hotel debt amounting to €800 million, which as around one hundred assets associated with it. According to Hernández-Puértolas, around thirty of these hotels may be transferred to HI Partners over the next few years, increasing the number of rooms owned by the investment company from 1,600 to 8,000. Meanwhile, HI Partners is also analysing the purchase of assets in the market that are not linked to the bank.

For the management of this real estate portfolio, HI Partners has just constituted two new companies: HI Partners Holdco Value Added and HI Partners Holdco Gestión Activa. The first vehicle will be the focus of most of the company’s efforts and will receive around 90% of the investment. It will take ownership of the best hotels in the portfolio, notably the largest properties, those situated in premium areas and those capable of generating significant yields once they have been refurbished. This company currently owns three assets: the Hotel Prestige Coral Playa, located on the Costa Brava; the Silken Málaga – which HI has just purchased from Urvasco -; and the new hotel that the company is constructing on Calle Atocha in Madrid, which will be managed by the Axel chain.

The thirty-odd hotels to be transferred to HI Partners from Sabadell’s debt portfolio are also expected to be incorporated into the Value Added company. The challenge is for that vehicle to generate an EBITDA of €35 million in 2018 and of €70 million in 2021.

Meanwhile, HI Partners Holdco Gestión Activa now owns 19 hotels, the majority of which are smaller properties, located in secondary areas. The objective is to divest the majority of these establishments, although the firm wants optimise their management first. As such, it expects to sign agreements with several hotel operators to this end.

Original story: Expansión (by Sergi Saborit)

Translation: Carmel Drake