Blackstone Will Pay Azora €224 million Following Termination of Contract

10 August 2018

Follows its successful takeover bid for Hispania.

The North American fund, through its subsidiary Alzette Investment, will terminate its contract with Hispania’s current asset manager. According to the agreed terms, Azora will be indemnified in the amount of €224.4 million, corresponding mostly to “success fees.” Blackstone had already announced its intention to grant the management of the hotels to HI Partners, its hotel management company.

Following the success of the Blackstone Group’s takeover bid for Hispania through its subsidiary Alzette Investment, announced at the end of July, the company announced the termination of its management contract with the Azora through a notice to the National Securities Market Commission (CNMV). The early termination will result in an indemnity that will exceed 224 million euros.

Hispania communicated Alzette’s decision to terminate the management contract between the Company and Azora Capital, signed on February 21, 2014. The conditions are set in the ‘Termination Letter’, according to which the company entitled to the “collection of the following fees for early termination under the Management Contract: (a) €33,698,143, equivalent to the amount of the base fee that would have corresponded to keeping the Management Contract in force until the end of its contractual term, and (b) €190,832,528 corresponding to success fees (performance fees) calculated in accordance with the Management Contract in the event of a change of control of the Company.”

As reported by Hosteltur tourism news, Blackstone plans to maintain Hispania’s assets, while changing the manager. In June, the American fund stated in its takeover bid, which provided details regarding technical aspects as well as the company’s proposed strategy after assuming control of the socimi, that it planned to control the hotel assets through an unlisted company, entrusting the hotels’ management to a subsidiary, HI Partners, and that it would terminate the company’s contract with Azora, which it has been managing Hispania’s assets for the past years.

Also, Alzette and the management company have agreed that Azora will continue cooperating temporarily with the Company ” to ensure an orderly transition after the completion of the takeover bid”.

Alzette has undertaken to present the terms of the Termination Agreement to the Board of Directors of the Company for its submission to the General Shareholders’ Meeting, which must be held no later than September 30, 2018, and to vote at said General Meeting in favour of the approval of said termination agreement for subsequent subscription by the Company.

Original Story: Hosteltur

Translation: Richard Turner

Irea: Hotel Inv’t May Reach €2,000M This Year

20 June 2016 – Expansión

Hotel investment in Spain may reach €2,000 million this year, according to estimates made in a study compiled by the real estate consultancy Irea.

Between January and May this year, based on provisional data, investment in the purchase of hotel assets in Spain amounted to €611 million, down by 14% compared to the same period in 2015.

Nevertheless, this investment level is very significant for the real estate consultancy, in comparison with the trend seen during the first five months of the year over the last ten years.

In terms of the volume of hotel assets sold, the figure is very similar to the same period in 2015. During the five months to 31 May 2016, 39 hotels have been bought and sold (compared with 42 last year), nevertheless the number of rooms transacted has decreased by 42.2% from 8,673 to 4,993 so far in 2016.

Increase in the average price paid per room

According to Irea, this implies a considerable increase in the average price per room from €81,000 during the period from January to May 2015 to €122,000 during the same period this year.

For the consultancy firm, this increase is primarily explained by the sale of Villamagna in Madrid (in Q1 2016), at a price of €1.2 million per room, which represents the highest price ever paid per hotel room in Spain.

In addition, the study shows that no hotel portfolios have been sold so far during the five months to May, compared with four that had been sold during the same period in 2015.

It is worth noting the Socimis’ commitment to the hotel sector in the short and medium term, a formula that is currently accounting for all of the operations associated with repositioning assets and adapting them to suit the premium segment.

Experts in the hotel sector agree that the level of growth in this industry may continue in Spain if the hotel supply is renewed and updated in line with the expectations of international tourists, in addition to the investment in technology and the search for customer loyalty.

Original story: Expansión

Translation: Carmel Drake

JLL: Hotel Investment Exceeded €2,650M In 2015

12 January 2016 – Expansión

2015 was a record year for investment in the hotel sector, driven primarily by Spanish buyers. The Canary Islands and Madrid were the stars in terms of location. Last year, 143 hotels were sold in Spain worth €2,650 million, which represents an increase of 65.6% compared with 2006, the previous record-breaking year; and more than double the investment volume recorded in 2014 – €1,180 million.

Spain was the third most popular European country for investors, behind the UK and Germany, according to a report by the consultancy firm JLL Hotels & Hospitality Group. And Spanish investors returned to the spotlight, thanks to the improvement in the domestic economy. In 2015, 74% of total investment was made by domestic buyers, compared with 58% a year earlier.

In this regard, the Socimis were the great discovery of the year. Merlin and Hispania, the two largest Socimis by market capitalisation, spent €965 million on hotels, whereby accounting for 36.4% of the total volume invested in Spain.

In terms of Spanish investors, the Socimis and investment funds were followed by Spain’s hotel chains, which accounted for 13.5% of total investment. The Catalan hotel chains H10 and Hotusa were the most active in 2015. They were followed by private investors, such as family offices, which accounted for 8.9%.

In the meantime, overseas investors accounted for 26% of total investment in Spain, with buyers from France being the most active – Accor’s acquisition of four Novotel hotels was a key deal – behind those from Germany – IFA paid €48 million for two properties in the Canary Islands – and Hong Kong – Mandarin purchased the Ritz in Madrid, together with the Saudi group Olayan-.

By type of investor, the funds increased their weight significantly during the year, specifically, up from 30.4% to 53.6% of the total. Hotel groups and private investors lost steam, in contrast to the real estate companies, which recorded a slight rise.

The Canary Islands accounted for 29.6% of total investment, benefiting from the upturn that Spain’s tourism industry is experiencing at the moment due to (political) instability in other competing countries in the Mediterranean. 31 hotels were sold there in total, primarily as a result of the partnership between Meliá and Starwood Capital, as well as due to the creation of Bay, the first pure hotel Socimi, by Barceló and Hispania.

Recovery

Madrid was the second most popular destination, accounting for 23.5% of total investment. The price paid for the Ritz hotel – €778,000 per room – was the highest recorded in Spain. Half of the operations involved five-star hotels and 43% involved four-star hotels.

Occupancy rates have improved in the Spanish capital, but the average price there continues to fall below its pre-crisis levels.

In the Balearic Islands, hotels worth more than €445 million were sold – 16.8% of the total – , above Barcelona, where 14 transactions worth €340 million were signed – accounting for 14% – above all, involving four-star properties. Despite the moratorium imposed by the mayoress Ada Colau, the Catalan city is the country’s leader in terms of profitability and the outlook there is positive.

Another trend in 2015 was the sale of hotel portfolios. 78 of the 143 hotels that changed hands belonged to a larger batch. This year, more operations of this type are expected, albeit smaller in value; and overseas Socimis and investors are expected to play a more active role. According to JLL, investment in 2016 could reach similar levels to those seen last year.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake