Tag: hotel rooms

2018: The Year that Blackstone was Crowned the King of the Spanish Real Estate Sector

17 December 2018 – Eje Prime

Blackstone wants it all and it wants it now. That is the sensation that the US investment fund, the new king of the Spanish real estate market, is transmitting throughout the real estate sector. Its portfolio is worth more than €20 billion after an accelerated period of purchases during 2018.

One of the objectives of the US fund manager has been, precisely, to expand its network in the Spanish real estate sector by entering markets such as the logistics segment. At the beginning of December, the company closed its latest operation in the country with the purchase of a logistics portfolio from Neinver for €300 million.

Nevertheless, the deal involving the giant Neinver is by no means the most significant operation that Blackstone has undertaken this year. Over the last twelve months, the group has taken control of Hispania, to grow in the hotel sector; it has acquired 80% of Testa, to manage thousands of rental homes, and in the logistics sector, it has accumulated 1 million m2 of space with the 55 assets from Neinver and the purchase of an industrial portfolio from Lar España.

Blackstone has disbursed almost €4 billion in the Spanish real estate sector this year, a figure that far exceeds the €127.5 million that it spent on its first investment in the domestic market in 2013. Moreover, that debut was not free from controversy, given that the group purchased 18 residential developments, containing 1,860 social housing units, which the Town Hall of Madrid sold the fund through the Municipal Housing and Land Company of Madrid (Emvsa).

Five years later, Blackstone is one of the largest owners of residential assets in Spain and the leader of the hotel sector. It leapt to first position in the hotel market ranking this year following its successful takeover of the Socimi Hispania. The company paid €1.99 billion for that vehicle, managed by Azora. With that operation, the fund added 46 assets and almost 13,150 rooms in Spain to a portfolio that it started to grow in 2017 with the purchase of HI Partners, the hotel arm of Banco Sabadell, for €630 million. In total, the manager owns 63 assets and almost 18,000 hotel rooms across Spain.

Hispania also provided Blackstone with residential assets worth €230 million, as well as 25 office buildings whose market value exceeds €600 million. Also in that segment, the company added the iconic Planeta office building in Barcelona to its portfolio during 2018, which it purchased from the Lara family in July for €210 million.

Spain, 20% of its global portfolio

Today, Spain accounts for 20% of Blackstone’s global investment. In total, the US firm owns property worth almost USD 120,000 million (€105,387 million) around the world. This real estate giant has become the largest unlisted real estate company in Spain (…).

The superiority of Blackstone’s portfolio in Spain with respect to those of the large domestic real estate firms is clear. The two largest players, Merlin and Colonial, are ranked within the top 15 Socimis in Europe and, yet, their portfolios are worth just half of that of the fund, at €11.785 billion and €11.19 billion, respectively.

Santander’s best friend

As well as mixing with other real estate players, Blackstone has made friends with some of the Spanish financial institutions. The banks, big losers in the previous real estate cycle, have worked hard over the last two years to place their property with the highest bidder, taking advantage of the new boom in the residential market.

In this way, in 2017, Banco Santander agreed with Blackstone the largest operation involving the sale of toxic assets from the real estate sector in the country. The fund manager purchased 51% of Popular’s property, a portfolio with €30,000 million in assets.

The relationship with the bank owned by the Botín family has been strengthened in 2018 with Project Quasar, the real estate firm created by the financial institution and the fund. The joint venture received a capital injection amounting to €300 million in May. Through this vehicle, the transfer of Popular’s assets is being carried out.

In order to place this property into circulation, as part of the operation in 2017, Blackstone also acquired the bank’s servicer, Aliseda, led by Eduard Mendiluce (…), who also manages the Socimi Albirana.

Albirana Properties is one of four residential Socimis that Blackstone currently has listed on the Alternative Investment Market (MAB). The others are Fidere Patrimonio, Corona Patrimonial and Torbel Investments.

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake

CBRE: Hotel Inv’t Will Exceed €3,000M In 2017

10 October 2017 – Observatorio Inmobiliario

The summer holidays led to a slow down in hotel investment in Spain during the third quarter of 2017, after 6 months of euphoria and record-breaking deals, when more than €1,400 million was invested. By contrast, investment volumes reached just €240 million during the months of July, August and September, which represents a 55% decrease compared to the same period in 2016.

Nevertheless, the most significant operations of the quarter took place during the month of September, which, together with the major sale and purchase operations that are in the pipeline, suggests that hotel investment in Spain will accelerate again during the last few months of the year, according to CBRE Hotels. The consultancy predicts that the volume of investment may reach €3,000 million in 2017, which would represent a historical record, exceeding even the figure registered in 2015.

According to data collected by CBRE Hotels, between July and September, investors spent €240 million on the purchase of hotel assets, including not only hotels per se but also tourist apartments, aparthotels and plots of land and buildings dedicated to hotel use. In total, 22 assets were transacted (involving 2,500 rooms), with holiday hotels accounting for the lion’s share (65%) of the total amount invested (and representing 80% of the rooms sold).

In terms of the destination of investments, in the urban sphere, deals were very evenly distributed between Spain’s main cities: Madrid, Barcelona, Málaga, Granada, Valencia and Bilbao. Nevertheless, in the holiday segment, investors spent 45% of their total investment in the two archipelagos (i.e. in the Canary and Balearic Islands).

In terms of the most significant operations, within the holiday perimeter, the acquisitions undertaken by Portobello Capital stand out – it was the most active investor during the third quarter of the year, starring in the purchase of several assets/stakes in hotels managed by Blue Sea Hotels & Resorts. In the urban segment, the most high-profile purchase involved Hotel Parque Central de Valencia by Senator Hotels & Resorts.

In the end, and just like during the first two quarters of the year, CBRE Hotels also brokered two operations during the third quarter. Firstly, it intermediated the sale of Hotel Dolce Sitges (5* and 263 rooms), which also became the most significant transaction of the quarter (in both the hotel and urban segments). On the other hand, the company executed the sale of a plot of land in Bilbao destined for the construction of the first hotel in the city of the Catalonia Hotels & Resorts chain. For Jorge Ruiz, Director of CBRE Hotels in Spain, “the unprecedented performance of the hotel sector during the first half of the year, both in terms of investment and operations, added to the volume transacted during the third quarter and the projects underway, suggest that investment in the sector could reach €3,000 million this year, whereby exceeding the record set in 2015”.

Original story: Observatorio Inmobiliario

Translation: Carmel Drake

Baraka Makes A Second Payment To Wanda For Edificio España

3 November 2016 – Expansión

The Baraka Group, owned by the businessman Trinitario Casanova, has made another payment to the Chinese group Wanda for Edificio España. With this payment, which will be added to the amount that the Murcian group handed over in July, another step is taken in the negotiations. The transaction is expected to close at the end of 2016 or during the first few months of next year.

Wanda, which acquired Edificio España from Banco Santander for €265 million in July 2014, decided to abandon the project following disagreements with the Town Hall of Madrid regarding the conservation of the exterior façade. It signed an agreement in principle with the Baraka Group in July 2016 to sell the property for €272 million.

In July, Baraka paid a deposit of €1 million and so Wanda promised to not negotiate the sale of the property with any other candidate at least until the middle of October. Casanova’s offer for Edificio España specifies that the acquisition will be made using the group’s own funds, although Baraka is now looking for financing in order to undertake the subsequent renovation of the property.

In parallel, the Baraka Group’s holding company is making progress in its conversations with the Hard Rock hotel group, which has expressed interest in operating the hotel that will occupy most of the building. Specifically, the Baraka Group’s plans involve opening a retail space on the first few floors of the building, and using the rest of the property to house a luxury hotel with 600 rooms, which will open its doors between the end of 2018 and the middle of 2019.

The property has a surface area of 71,000 m2, of which 15,000 m2 will be used for the retail space between the first basement floor and the third floor, and the rest will converted into the five star hotel.

Casanova has promised to conserve the main façade and the rest of the building’s external structure and whereby comply with the demands imposed by Madrid’s Urban Development team.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Hotelbeds Borrows To Finance Its Own Purchase (By Cinven & CPPIB)

8 June 2016 – Expansión

Hotelbeds has had new owners for just over a month. At the end of April, the private equity firm Cinven and the Canadian fund CPPIB won the bid opened by TUI to sell the Spanish travel services supplier. They put a joint offer on the table, valuing the company at €1,165 million, which exceeded all of the other bids. Now, they are holding negotiations regarding how they will pay that price.

All indications suggest that the target company will end up paying a large portion of the bill itself, in a debt operation that is typical in private equity acquisitions. According to several financial sources, Hotelbeds is in conversations with seven banks to obtain financing, including a syndicated loan amounting to €490 million and a line of credit amounting to another €150 million.

BBVA, Morgan Stanley, HSBC, UniCredit, Deutsche Bank, Bank of Ireland and Mizuho are the entities participating in the syndicate, which is expected to be closed within the next few days and whose fruits will be used to pay for some of the acquisition.

Neither the purchaser nor the vendor has provided details about how much of the €1,165 million value assigned to Hotelbeds will be paid for in debt and how much will be paid for in cash, but some of the parties involved implied that the latter will account for more than half of the total price. Using that reference and the fact that Cinven and CPPIB are not purchasing 100% of the company, rather some of its shares will remain in the hands of the travel services supplier’s management team, then it seems likely that the €490 million syndicated loan will cover a significant part of the total financing.

Hotelbeds will pay at least 500 basis points (5.5%) above Euribor for the syndicated loan, which will have a seven year term, according to financial sources. That spread was the maximum established to begin negotiations, so it may decrease, depending on the banks’ appetite and the conditions offered by the company.

The same thing will happen with the €150 million line of credit. In that case, the term will be six years and the minimum spread will amount to 450 basis points, but the definitive conditions will not be agreed until the negotiations have been finalised. (…).

Hotelbeds’ financial results work in its favour with respect to its negotiations with the banks, according to financial sources. The supplier works with 75,000 hotels in 180 countries and recorded a turnover of €1,200 million in 2015 and an EBITDA of €117 million. In addition to hotel rooms, the company also manages transfers, trips and corporate events.

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake

Hispania Buys 4 Hotels In Gran Canaria For €75M

21 October 2015 – Expansión

Hotel assets are whetting the appetite of investors once again and proof of this is the firm commitment made by the real estate company Hispania for that kind of establishment. The company, which channels most of its investments through its subsidiary Socimi Hispania Real, has spent €780 million buying hotel assets, out of a total amount invested (including debt) of €1,300 million since the company debuted on the stock exchange in March 2014.

“Hotels have been strategic assets for us ever since we launched Hispania, because we already had experience in Azora – the managers of Hispania – which manages 12 hotels through a fund”, explains Javier Arús, Head of Hotels at Hispania.

The latest milestone in this strategy has been the purchase of five hotels through two operations. Firstly, it has agreed the acquisition of Hotel Holiday Inn in Madrid for €25 million. (…).

Secondly, the real estate company has also agreed to purchase four hotels located in Maspalomas, in the south of Gran Canaria, which together have 1,183 rooms. “We have been working on this deal since April 2014. It has been a very complex process, given that the company filed for bankruptcy in June. Now we have drafted a proposed agreement to purchase the debt from the creditors and recapitalise the company, and we are waiting for the legal confirmation”. Hispania will invest €75 million to acquire these establishments (three 4-star hotels and one 3-star) and will spend a further €9 million on their repositioning.

Bay

Following these transactions, the company in which George Soros and John Paulson hold stakes, will have more than 9,000 rooms, spread across both the urban and holiday segment. Many of these hotel apartments are owned by Bay, the Socimi that Hispania and the hotel chain Barceló have just launched, in which Hispania holds a 80.5% stake.

Nevertheless, some of the assets that Hispania owns outright could also be moved into the joint venture. “The Dunas portfolio – recently acquired in Gran Canaria – or Bahía Real – in Fuerteventura – may end up in Bay, since it would be logical for the whole holiday portfolio to end up in this company, some operations that must be approved by the Socimi’s Steering Committee”.

Currently, Bay owns 11 hotels, managed by Barceló, with 3,946 rooms, to which Hispania will soon add another five establishments also managed by its partner.

Hispania plans to continue on its shopping spree, despite the fact that there are many investors looking for opportunities in the Spanish hotel sector. “The market in Spain is very large and there has been very little institutional money until now, since investors used to be the hotel chains themselves. We will continue working to sign a couple more operations before the end of the year”, said Arús.

Between January and September, total investment in the hotel sector amounted to €1,273 million, up by 54%, according to the consultancy firm Irea, which forecasts that 2015 will surpass the record of €1,780 million registered in 2006. JLL estimates that that figure will reach €2,000 million. The experts in the sector agree that (this level of) investment will continue into 2016.

Original story: Expansión (by R. Ruiz and Y. Blanco)

Translation: Carmel Drake

Barceló Sells Hotel In Tenerife To Chinese Group ‘Kangde’

23 April 2015 – Expansión

Another transaction in the Spanish hotel sector has a foreign buyer. Barceló has sold the Hotel Barceló Santiago (in Tenerife) to the Chinese group Chongqing Kangde Industrial. Negotiations began in 2013, when Barceló and Kangde signed a framework agreement to explore options together.

After more than a year of meetings, the Spanish tourism group agreed the sale of the property to Kangde. According to the Chinese group’s website, the alliance was signed during Lu Chaokang’s tour of Europe in search of investment opportunities. Chaokang, the Chairman of Kangde, visited a dozen projects in Budapest, Madrid, Barcelona and the Canary Islands.

Consideration of €50 million

The sale, which amounted to around €50 million, has not been formalised yet, as the buyer is still waiting to receive approval (of the purchase) from the Chinese government. The deadline for obtaining the backing ends in May. Nevertheless, according to industry sources, Barceló has already received confirmation that the transaction will close on time.

The Spanish chain will continue to manage the four-star hotel, which has 406 rooms and is located close to the Playa de los Gigantes. However, Kangde may be interested in renovating the property and increasing its (star) rating. In 2006, Barceló invested €7 million in the refurbishment of Hotel Santiago, which entered its portfolio in 1995. The sale of the hotel forms part of the process designed by Barceló to reduce its exposure to real estate, which has reached a historic high – (it owns) almost 63% of all of its rooms. The major milestone on this roadmap has been the creation of the Socimi, Bay, together with Hispania. Barceló will transfer 16 hotels and two shopping centres worth €421 million to the Socimi and whereby reduce the percentage of rooms it owns to 43%.

In 2014, Barceló recorded a profit of €46.4 million, up 85.6% on the previous year and a turnover of €2,056.6 million.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Hilton To Double Its Presence In Spain In 3 Years

14 April 2015 – Expansión

Growth / The US hotel giant, which is the second largest chain in the world, operates eleven hotels in Spain and is now backing its own growth in Madrid, Barcelona and Sevilla.

Hilton is redoubling its commitment to Spain. The US hotel giant, which is the second largest chain in the world by size (with 4,115 properties and 678,630 rooms at the end of 2013, according to the ranking published by Hotels magazine) manages nine hotels in Spain (66% through franchise agreements).

In addition, Hilton owns two other hotels, which are due to be incorporated into its network imminently, including the Reserva del Higuerón complex (in Málaga). Hilton will take over the reins there this summer and will thereby return to the Costa del Sol after (an absence of) more than 40 years.

“Our model is based on management; investment is undertaken by a partner, and it has been difficult to finance projects in Spain in recent years, but now the market is starting to open up and we have always been very interested in it”, says Simon Vincent, President of Hilton in EMEA (Europe, Middle East and Africa) and a member of the chain’s Board of Directors.

“The market in Spain is very fragmented, but we believe that opportunities exist for refurbish existing hotels and incorporating them into our network; furthermore prices are beginning to recover”, he adds.

In terms of the numbers, Vincent’s objectives are clear: “Doubling our size in Spain in two or three years would not be unreasonable, since that is what we have done in Turkey”. In Europe alone, Hilton operates 353 establishments and will incorporate a further 447 hotels (into its network) over the next three years. Barcelona and Sevilla are both on its priority list, but its primary focus in Spain will be on Madrid. “We were the first international brand (in Madrid), when we opened the Madrid Castellana Hilton in 1953 (today the Intercontinental) and the capital city is a high priority for the group and all of its brands”, he says.

At this stage, a priori, Hilton has ruled out forming an alliance with a local partner to accelerate its growth, like Marriott did with AC Hoteles in 2010.

Market consolidation

Vincent is very familiar with the travel sector; he has two decades of experience working for groups such as Opodo – today part of the eDreams Odigeo group – and Thomas Cook. He considers that if Spain lacks a large hotel group of its own, then “that is because the market is regional with strong (local) brands, which is precisely one of its strengths”. Nevertheless, “over time, there will be consolidation in the industry and the tour operators will want to participate and control the experience they offer their customers”.

In terms of the emergence of Socimis (Sociedades Anónimas Cotizadas de Inversión Inmobiliaria or Listed Real Estate Investment Companies), which are similar to REITs in the USA, the executive belives that “they may help to professionalise the sector, because that is how the funds that invest in hotels work”.

In his opinion, “the key (to success) in the hotel sector is size at the global level. For Hilton, the most important objective is not to have a presence in as many countries as possible, but rather to bring the greatest number of customers as possible to those countries through our (its own) system”. This is demonstrated by its loyalty program, which has more than 40 million users.

With 12 brands, Vincent argues that Hilton’s success is “based on our ability to convert revenues into profitability and growth, because our brands are in very high demand”. Thus, 19% of the hotels that the chain will open around the world over the next few years will bear one of the Hilton’s own brands. Nevertheless, the door is open to new brands as well. “We think that there is still space (in the market)”.

Over the medium term, Hilton’s route map includes increasing its scale and enhancing its geographical diversification and the appeal of its brands, as well as promoting the digitalisation of its content, and expanding its distribution channels.

Hilton recorded revenues of (US)$10,502 million and profits of (US)$673 million in 2014 and predicts further growth again this year, both at the operational level, as well as in terms of its share price, which is currently trading at $30.38/share. According to Vincent, “we are very happy with our IPO, the foundations of our business are solid and the market acknowledges that”.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Tinsa Heralds A New Era For The Hotel Sector

24 February 2015 – Expansión

More specialisation will be required to combat the maturity of the market.

According to Tinsa, the number of hotels has grown by 13.7% over the last seven years. By the end of 2014, there were 7,840 establishments and 1.26 million rooms in Spain.

In its Hotel Market 2014 study, prepared on the basis of the assessment of 2,700 establishments – 35% of the total market in Spain – the appraisal company states that the construction of a five star hotel requires an average investment of €262,000 per room, compared with €135,000 per room for a four star hotel, even though the number of rooms is typically similar in both cases – around 140. For three star accommodation, the investment required is around €89,000 per room. The report shows that profitability increases in line with the category. A five star hotel generates €29,600 per room per year, compared with €14,800 for a four star establishment. Revenue per available room (RevPar) is €117 for five star hotels and €60 for four star properties.

Tinsa indicates that, over the coming years, differentiation will become increasingly important. The hotel industry will undergo a similar transformation to that experienced by the airlines with the arrival of low cost competitors; some chains are already beginning to distinguish themselves with services such as mobile check-in.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake

Wyndham Pays €50m For Dolce Hotels And Resorts

12 February 2015 – Cinco Días

The hotel chain strengthens its business tourism division as a result of the acquisition.

The hotel chain Wyndham revealed yesterday that it has purchased Dolce Hotels and Resorts for $57 million or around €50.4 million, to consolidate its position in the hotel segment dedicated to corporate and business tourism.

The US firm, a subsidiary of Wyndham Worldwide, which is listed on the NYSE, thereby takes on the management of 24 new hotels with more than 5,500 rooms. The establishments are located in the United States, Canada, France, Spain, Portugal, Germany and Belgium.

(….)

The US Group has confirmed that it will maintain and expand the Dolce brand alongside the other brands that it operates, including Wyndham, Tryp, Ramada, Baymont Inn and Travelodge. The group has 7,600 hotels in 71 countries and a total of 655,000 rooms.

(…)

In Spain, Dolce operates the Dolce Stiges, a hotel with 263 rooms, which Oaktree took ownership off at the end of last year, after it took on the €46 million debt that the previous owner, Ichindoney Parnership, held with one of its creditors, Allied Banking Corporation.

(…)

Original story: Cinco Días (by Laura Salces)

Translation: Carmel Drake

Barceló Doubled Its Profit In 2014 To Generate c. €50m

12 February 2015 – Expansión

Barceló recorded a profit of c. €50 million in 2014, whereby doubling its result from the previous year. The co-chairman of the hotel chain, Simón Pedro Barceló announced the result yesterday (the group’s definitive results for the year are still pending) and attributed the increase to “a significant increase in EBITDA (from €183 million to €215 million) and the incorporation of ten new hotels in Mexico and the Dominican Republic. Moreover, 2014 was the first full year to include the results of its new travel division.

Turnover exceeded €2,000 million, of which €1,100 million was generated by the travel sector and €900 million from hotels. The total figure amounted to €1,800 million in 2013. The co-chairman of Barceló said that it is too soon to say how the tourism sector will evolve over the course of the year, but he noted that “the Caribbean and Mexico have had a strong start to the year and although we do not know what will happen during the summer months, we believe that we will outperform the results recorded in 2014 by 10%”.

According to the latest information released by the Mallorcan company, Barceló has 140 hotels in 17 countries containing 37,380 rooms. Half of them are located in Europe and the remainder are in America, primarily in the US and the Caribbean. It also has 400 travel agencies operating in 22 countries.

New acquisitions

The group, which returned to the travel agency segment last year through its acquisition of Orizonia, together with Globalia, has not ruled out growth through further acquisitions. Yesterday, Simon Pedro Barceló confirmed that “new corporate transactions have not been ruled out” in the travel agency sector.

The family business owns 39% of its hotels outright, and leases or manages the remainder. Its goal is to be “a great hotel company”, said Barceló yesterday, which is why the company is continually adding new hotels to its portfolio. “We have just signed an agreement to lease a new 4 star hotel with 250 rooms in Berlin”, he said.

Barceló, who was giving a lecture at ESADE, was very optimistic about the future of the economy and the tourism sector in particular and encouraged employers to work together with entities that are independent and able.

Original story: Expansión (by Marisa Ángeles)

Translation: Carmel Drake