Hotel Miguel Ángel’s Socimi Will Debut On The MAB In 2017

5 October 2016 – Expansión

This iconic asset will form part of the Socimi created as a result of the alliance between the hotel group BlueBay and Le Royal Hotels & Resorts, which is due to debut on the Alternative Investment Market (MAB) during the first quarter of 2017.

In addition to Hotel Miguel Ángel, the Socimi will initially comprise other hotels located in Mallorca and a commercial development project on the Costa del Sol. In the absence of the opinion of an independent expert, first estimates indicate that the Socimi will be worth around €500 million.

The company has already engaged Armabex to prepare the informative document for joining the market. That firm will act as the global coordinator, alongside PwC, throughout the process.

The contribution of the hotel, which is owned by the Iraqi born British investor Nadhmi Auchi, who owns Le Royal Hotels & Resorts, has been carried out through a company restructuring process performed, primarily, using local companies and entities in Luxembourg.

New assets

“Although during the first phase, assets such as Hotel Miguel Ángel by BlueBay, some hotels in Mallorca and a commercial development on the Costa del Sol, including a hotel, will be included, the group will subsequently incorporate more properties, as a result of the asset restructuring process in commercial, fiscal and corporate terms, as well as due to the purchase of new assets”, explained the Chairman of BlueBay Hotels, Jamal Satli Iglesias in an interview. “The Socimi will be managed from Dubai, where I live, which will enable us to service different investors from the Middle East and London, for the other international investors”, said the Syrian-born Spanish businessman.

For the executive, the constitution of this Socimi forms part of a corporate strategy through which, in line with the actions of other international hotel chains, he wants to separate out the asset ownership and the operational sides of the business. “With this, we are looking for growth and consolidation”.

Amongst the benefits of this Socimi, Satli Iglesias highlights its significant diversification, both in terms of properties as well as lease contracts, which allows it to expect “very attractive returns, which will continue to increase over the next few years, driven by growth in the real estate sector and by the forecast growth in the tourism sector”.

Satli Iglesias said that this operation seeks to obtain “transparency and returns”. “During this first phase, we are more open to the entry of institutional investors and other hotel chains or hotel property owners who may want to join our project”.

BlueBay – the fifteenth largest hotel company in Spain – currently has 42 hotels in its portfolio, of which it owns 50%. “We are committed to a hotel management regime, backed by property ownership, and our future strategy is to increase the number of hotels that we manage under this structure”, he explained.

“Our strategic plan for 2017-2020, which we have just presented, involves increasing our current hotel supply by almost 50% to exceed 60 hotels by the end of the period. In terms of the number of beds, we expect the figure to double from its current level (23,000 beds) to more than 50,000 beds by 2020”, said the executive.

Satli Iglesias explained that in order to undertake these expansion plans, the group plans to allocate around 80% of the company’s profits to growth.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Hotel Socimis Get Ready To Invade The MAB

16 March 2016 – Cinco Días

Hotel Socimis are getting ready to colonise the Alternative Investment Market (MAB). Hotel chains of all sizes are analysing this vehicle in light of the tax incentives that it offers. More than six companies are already working on their debuts.

Bay, the vehicle created by Hispania and Barcelona, fired the starting gun in the hotel Socimi race. Socimis are vehicles whose activity involves real estate investment, and they also offer tax incentives for investors. “This year, the hotel Socimis will position themselves in the market, with urban properties and holiday resorts”, says Bruno Hallé, Managing Partner at the consultancy firm Magma Hospitality, who highlights the appeal that the Spanish hotel industry holds for both foreign travellers and investors.

The vehicle is being analysed by hotel groups of all sizes (small, medium and large) that have a lot of real estate on their balance sheets and that view this option as an alternative for obtaining liquidity and continuing with their growth strategies, as well as of separating their hotel activity out from their assets. In the case of Bay, it owns a portfolio of 16 vacation hotels, which also includes two shopping centres. That Socimi will soon debut on the MAB.

For other Socimis, the MAB has also become the launch pad. Of the 15 Socimis now operating on that platform, three are hotel companies: Obsido, Trajano and Promorent, and another six such companies are planned over the next few months.

“The Socimi is a vehicle that anyone working in the real estate sector has to consider”, says Antonio Fernández Hernando, President of Armabex, one of the registered advisors to the MAB that specialises in Socimis. It is currently promoting Bluebay, the hotel chain owned by Jamal Satli Iglesias, which has been managing the Hotel Miguel Ángel in Madrid for the last few months. Sources at the hotel group acknowledge that no specific decisions have been taken yet about the assets that are going to be incorporated into this vehicle, but according to estimates, it will have a value of between €450 million and €500 million.

The valuation of the most urgent project that Armabex is working on is much smaller. It will have just one hotel, in the North of Spain, and is owned by a family group, which also plans to launch another vehicle of this type with another four properties.

Behind them is a list of projects under consideration, including one that Antonio Fernández Hernando says has an initial valuation of €150 million.

Among the investors who have realised their plans to launch pure hotel Socimis is Millenium. The group, chaired by Javier Illán, is evaluating the option of creating a hotel Socimi and has set an investment objective of €300 million, which could increase to €500 million, in both the holiday and urban segments.

Besides the Socimis, another alternative preferred by hotel groups in recent years has been the creation of joint ventures with investment firms. Such is the case of Meliá, which launched a company with Starwood Capital, to which it sold a portfolio of six properties for €176 million. “The future of the Socimis will involve the creation of multi-brand vehicles, like the ones that already exist in the US”, says Hallé, who acknowledges that the sector is in its infancy and will become more established over the next few years.

Original story: Cinco Días (by Laura Salces Acebes and Pablo Martín Simón)

Translation: Carmel Drake

Hilton To Open Hotel In Centre Of Madrid

11 November 2015 – Expansión

The US giant is set to debut its Double Tree brand in the heart of the capital, with a 61-room hotel on Calle San Agustín, which the Pérez Gil family will manage under a franchise agreement.

Hilton is joining the hotel battle in the centre of Madrid. The US group will debut its Double Tree brand in Madrid in 2016, with a hotel in the tourist centre of the capital.

Specifically, it will open a hotel in a building that currently houses offices on Calle San Agustín, Madrid. This building is owned by the Pérez Gil family, which also owns several other hotels in Madrid. The owner will take responsibility for the renovation of the building and will manage the four-star hotel under a franchise agreement.

Hilton, whose only presence in the capital until now has been near the airport, is moving into the centre to compete against Four Seasons and Mandarín, which are preparing to open hotels of their own in the Canalejas complex and in the Ritz, respectively. The US chain also participated in the bid to manage the Hotel Miguel Angel, but in the end that contract was awarded to Bluebay.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

BlueBay Signs JV With Nadhmi Auchi To Operate Hotel Miguel Angel

18 September 2015 – Cinco Días

The Madrilenian Hotel Miguel Angel is going to be operated by a prestigious player once more, but not one that has a significant international presence. The hotel chain BlueBay will manage the property from now on, after it reached an agreement with the owner, the Iraqui born Briton Nadhmi Auchi, who has been running the hotel since December 2013, when Occidental Hoteles departed, whereby putting an end to its operations in Spain.

All of the international hotel chains have had their eyes on Hotel Miguel Angel, amongst others, since the Four Seasons announced its arrival in Madrid, in the Canalejas complex, and Mandarin announced its acquisition of the Ritz. In the end, the Spanish firm BlueBay, owned by investor Jamal Satli Iglesias, will take over the management of the property, which has 267 rooms, under an agreement that will involve the creation of a joint venture between BlueBay and Nadhmi Auchi. Together, they will invest around €35 million on the refurbishment. The renovation will be completed over the next few months and will involve the creation of new facilities and the expansion of the gastronomic offer, according to the chain, which aims to convert the hotel into “one of the most emblematic luxury, 5-star establishments in the city and in Spain”, said the CEO of BlueBay, Joaquín Janer.

This operation is BlueBay’s first foray into Madrid – traditionally, the company has a strong presences in the holiday hotel market, but not in the city hotel segment – it owns one 3-star hotel in Barcelona and two hotels in Mérida (one 5-star and one 4-star). BlueBay’s portfolio contains 52 properties across 27 locations. It will soon add eight more assets as a result of its international expansion, which will take place in the Middle East, Latin America and Europe. In April, it announced its expansion into Morocco and it plans to start constructing four hotels in Brazil this quarter.

In Spain, BlueBay is also working to open two other properties, in Marbella and Estepona, in 2018, which will require an investment of around €100 million. The chain, founded in 1976, operates six brands, including the urban specialist BlueCity. The brand used to be owned by Marsans, but following that company’s bankruptcy in December 2009, the businessman Jamal Satli Iglesias acquired it from Posibilitum, in an operation that included the management of 11 hotels. Satli Iglesias also holds a stake in Málaga Football Club, through which he has a dispute pending with its chairman, Abdullah Al Thani.

Renovation of Madrid’s luxury hotels

The refurbishment of Miguel Angel will represent a new boost for the 5-star segment in the capital, following the arrival of Four Seasons, which resulted in a “pull effect” in Madrid for other major international operators. During this time, Mandarin joined forces with the Olayan Group to purchase the Ritz. Despite this, the city’s hotel market is still missing companies such as Hyatt, Kempiski, Hilton, W and Shangri-La, although the details of the Wanda group’s plans for its hotel project at Edificio España have not yet been revealed. One of the most tempting properties for investors and operators over the coming months will inevitably be the Villa Magna, whose owner rejected a purchase offer from Jaime Gilinski in August for €190 million, and the (Westin) Palace. The owners of the latter have set a sales price of €330 million for the establishment.

Original story: Cinco Días (by Laura Salces Acebes)

Translation: Carmel Drake

Hotel Villa Magna On The Market For €180M

2 June 2015 – Expansión

Madrid/ Sodim, the holding company owned by the Portuguese family Queiroz Pereira, is looking for a buyer for the five star hotel it acquired for €80 million in 2001.

Following the sales of the InterContinental and Ritz hotels to the Qatari sovereign fund and the alliance formed by Mandarin and the Saudi firm Olayan, respectively, it is the turn of Villa Magna. Sodim, the holding company owned by the Portuguese family Queiroz Pereira, has put the hotel, which it purchased from the Japanese company Shirayama in 2001 for €80 million, up for sale.

Sodim is asking €180 million for the five star property, located on Paseo de la Castellana. If it achieves its goal, it will become the largest operation to be signed in Madrid, ahead of the Ritz – €130 million – and the InterContinental – €70 million – but behind the €200 million paid by the Qatari Diar fund for Hotel Vela in Barcelona in 2013.

The operation, which is in its initial phases, may attract interest from foreign investors and international hotel groups wanting to improve their location or enter Madrid’s market, such as Hyatt, Hilton, Shangri-La, Kempinski and Jumeirah, amongst others.

Hyatt managed the Hotel Villa Magna for almost two decades until 2009, when following the complete renovation of the hotel, the owners decided to take over the management themselves. Sodim also owns the Hotel Ritz in Lisbon, which is operated by Four Seasons, which is itself finalising its entry into the Spanish market, at the Canalejas complex in Madrid, together with Juan Miguel Villar Mir.

Hyatt no longer has a presence in Spain after it exited the Villa Magna and La Manga (Murcia). Its name has also appeared on the list of candidates to take over the management of the Hotel Miguel Angel, whose future is still not clear. Its owner, the British investor of Iraqi origin Nadhmi Auchi, is operating the property following Occidental’s exit last year.

(…)

The Hotel Villa Magna underwent a major refurbishment several years ago. It closed its doors on 1 August 2007 and reopened again at the beginning of 2009…€50 million was invested in total…the result was a hotel with fewer, but more luxurious rooms. The property retained its distinctive pink granite façade and the number of rooms decreased from 182 to 150. In exchange, the number of suites increased from 18 to 50. It also expanded its gastronomic and leisure offer, with new restaurants and a spa. Since 2009, it has offered rooms measuring between 30m2 and 290m2 – the Royal Suite.

The average room rate at the Villa Magna starts from €310 per night for a standard room. The Royal Suite costs €16,000 per night.

(….) The luxury hotel sector has been hit by the crisis, although the Villa Magna has not suffered as much as some. In 2013, it generated turnover of €19.29 million, up 4.8%…and the net profit was €3.68 million, compared with losses of €14.89 million in the previous year.

Nevertheless, the hotel closed 2013 with negative equity of €33.8 million, due to financial charges and impairment losses. Its financial debt exceeded €70 million. Even though it has the backing of Sodim through equity loans, the auditor PwC warned of significant uncertainty in terms of the hotel’s capacity to continue as a going concern.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Mandarin Oriental Enters The Bidding War To Buy The Ritz

12 February 2015 – Cinco Días

A new chapter has begun in the bidding war to buy the Ritz in Madrid, one of the most emblematic hotels in the capital. The property has been on the market for almost two years, but may have a new owner in a matter of days. Mandarin Oriental, one of the largest Asian luxury hotel chains, has set its sights on the hotel, which is currently controlled by Orient-Express and Omega Capital, the investment company owned by Alicia Koplowitz.

The owners of the Ritz have been looking for a buyer for the property for almost two years, which, despite its prime location and the power of its brand, has lost much of its appeal in recent years, due to a lack of investment. This has meant that all of the operators that have shown an interest in acquiring the property have identified the need to undertake a major refurbishment, which has played against a quick sale.

Despite that, Orient-Express, now known as Belmond, and Omega have remained steadfast in their price expectations, which led Marriott to placing an offer for €130 million on the table; the transaction fell through at the last minute, when it seemed like every blessing had been given. The problem was that, by adding the purchase cost to the amount required to reform the property, the buyer considered that the final result was infeasible.

Fairmont took over the reins in the bidding process during the second half of last year, by offering €120 million for the property, whose refurbishment it valued at around €60 million. The luxury hotel chain analysed all kinds of options to try to close the transaction successfully, ranging from reselling the rights of the Ritz brand to Marriott – which would have allowed its rival to use the brand throughout the Iberian Peninsular – to addressing the possibility of operating the asset under its second brand, Raffles.

But, according to several market sources close to the negotiations, Fairmont has now also withdrawn from the bidding, leaving the way open for Mandarin. The Asian player may end up closing this complex transaction, mediated by JLL, through an agreement whereby it takes on a management role, but which, in any case, will allow the Asian chain to establish itself in Madrid, a market that it has been analysing with much interest for over a year.

After acquiring numbers 38 and 40 on the exclusive Paseo de Gracia in Barcelona, overlooking Casa Batlló, the Hong Kong firm opened its first property in Spain at the end of 2009. With this investment now well established, the Asian hotel chain has plans to grow in the country, both in Barcelona and, above all, in Madrid.

Luxury hotels arrive in Madrid

The emergence of Four Seasons in the capital, which has reached an agreement with OHL Desarrollos to open the luxury Canalejas complex, has been a catalyst for the Madrilenian hotel market. The large international chains have set their sights on the city and deals are expected to be signed for properties such as the Hotel Villa Magna, the Hotel Miguel Ángel and the old headquarters of Asturiana de Minas; without forgetting the Edificio España, which was acquired by the Chinese Group Dalian Wanda.

These deals will follow others agreed in the last few months, such as the opening of Barceló’s four star hotel in the Torre de Madrid, the conversion of the Hotel Asturias into a boutique hotel and the transformation of the historical Tio Pepe building into a 5 star hotel.

Omega Capital and Belmond acquired the Ritz twelve years ago for €125 million. The strong impact of the economic crisis on the hotel sector in the capital, with declining tourist numbers and low prices, in addition to the cost of the pending renovation of the emblematic hotel, has taken its toll on the brand, for which an impairment loss of €12 million was recorded in 2013, the last full period for which official results are available.

Original story: Cinco Días (by R. Ugalde)

Translation: Carmel Drake