Tag: hotel sector

Hispania’s Shareholders Approve Block Sale of its Office Portfolio for €600M+

4 April 2018 – Eje Prime

Hispania is putting the sale of its office portfolio back on the table. Today,  at its General Shareholders’ Meeting, the Socimi will submit to approval the block sale of its rental office portfolio, a set of 25 buildings worth €603 million. It is a divestment that the Socimi, in which George Soros holds a stake, launched a year ago, suspended in October 2017, and which it has now resumed.

Hispania’s assembly is also going to approve the distribution to shareholders of an extraordinary dividend of €1.97 gross per share linked to the completion of that divestment. The payment will be charged against the issue premium and will involve distributing €215 million in total. This dividend will be added to the ordinary remuneration to shareholders, which will amount to €0.87 per share this year, the first payment of which, amounting to €0.41295 gross per share, was already made in March.

Besides Soros, who holds a 16.6% stake in the firm, the other main shareholders are other overseas institutional investors, such as Fidelity, with a 7% stake, Conepa, with another 6% stake, and Bank of Montreal and BlackRock, with 3% each. The Socimi chaired by Rafael Miranda is framing the sale of its office portfolio within its strategy to focus on the hotel business.

Other items on the agenda at Hispania’s General Shareholders’ Meeting include the re-election of the directors to their roles as the Chairman of the firm and another five members, including Concepción Osácar, José Pedro Pérez-Llorca and Joaquín Ayuso. Hispania will also approve its accounts for 2017, which reported a net profit of €222.82 million, down by 27.7% compared to the previous year.

Original story: Eje Prime

Translation: Carmel Drake

CaixaBank to Lend €3bn to Hotel Sector

15 March 2018 – Expansión

CaixaBank has declared the hotel sector strategic for increasing its credit investment. Through its new line of business CaixaBank Hotels & Tourism, the entity has just signed an agreement with the Spanish Confederation of Hotels and Tourist Accommodation (Cehat) to make available a specific financing line of €3 billion to its 13,000 establishments over two years.

The bank led by Gonzalo Gortázar closed 2017 having granted €1.5 billion in loans to the hotel sector, where it has a portfolio of 14,000 clients – two out of every three hotels in Spain – and €5 billion in terms of business volume. With the launch of the new division, CaixaBank expects to grow its loans to this segment by 20% during the first year.

Original story: Expansión

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

The Vilella Family Puts its ‘Helios Hotels’ Portfolio up for Sale for €110M

9 January 2018 – Eje Prime

The Spanish hotel sector is starting 2018 in the same way that it closed 2017, with negotiations for the sale of portfolios. Whilst during the final days of last year, the sector witnessed the sale of HI Partners, which was sold by Sabadell to Blackstone, and the acquisition of all of the shares in the chain Bay by Hispania, January is starting with the placement on the market of Helios Hotels, the chain owned by the Catalan Vilella family and Mehdi Hamila. The objective of the partners is to raise €110 million from the different assets that the company owns in the Balearic Islands, Cataluña, the Community of Valencia and Andalucía.

With 1,000 rooms in total, the Helios portfolio contains four hotels and an aparthotel, although the company is yet to receive an offer that meets its expectations, according to Crónica Global. The hotel chain’s assets comprise: Helios Lloret (Girona), Helios Mallorca, Helios Costa Tropical (Almuñécar, Granada), Helios Benidorm (Alicante) and Apartamentos Helios Mallorca.

The Vilella family is renowned in the hotel sector on the Costa Brava, where, through the family company Turiexpert, it owns the Hotel San Carlos in Roses.

Original story: Eje Prime 

Translation: Carmel Drake

Barceló Offers €2.48bn For NH & Sets 3-Month Negotiation Period

21 November 2017 – Expansión

To create a hotel colossus with more than 600 hotels and 109,000 rooms in Europe, Latin America and the USA, and one of the largest tourism companies in Spain. With this objective in mind, the Barceló group has initiated contact with the NH Hotel Group to propose one of the largest hotel mega-operations in recent years in Spain.

Barceló is offering a swap equation that involves valuing each NH share at €7.08. In other words, it is willing to pay €2.48 billion for the company in total. That valuation represents a premium of 27% over the group’s average share price during the three months leading up to 30 October, of €5.56. Moreover, that premium rises to 41% if we consider the company’s closing price last Friday of €5.

Yesterday at 12:30, Spain’s National Securities and Exchanges Commission (CNMV) lifted the suspension on trading that had been weighing down on NH’s shares, but the avalanche of purchase orders meant that it took another 45 minutes for the shares to actually start trading again. By the close of business, NH’s list price had soared by 11.8%, to €5.59. In this way, its market capitalisation rose from €1,751 million on Friday to exceed €1,950 million. So far this year, the hotel company has seen its share price rise by more than 46%, however, it is still well below the €14.70 per share that it reached in 2007, at the height of its stock market boom.

Barceló submitted to the CNMV a letter sent by Simón Pedro Barceló, Co-President of Group Barceló, to the Chairman of the Board of Directors of NH, Alfredo Fernández Agras, in which he proposes considering the merger of the two companies. According to the initial proposal, the Mallorca-based firm would end up owning 60% of the merged group. Barceló explains that his interest in this merger stems from “the great strategic sense and the exceptional potential for the creation of value for the shareholders of both companies”.

The letter also opens the door for the merged group’s corporate headquarters to be located in Madrid and it proposes that the maximum governing body of the merged company, in which Grupo Barceló would hold a majority stake, would have sufficient members to ensure that the existing shareholders of NH are represented.

Barceló proposes a merger, in other words, “the integration of Grupo Barceló and NH through the delivery of new shares issued by NH to Grupo Barceló, keeping the company listed”. “Our intention is to integrate all of the assets and liabilities of Grupo Barceló, including our Hotel and Travel divisions, which we believe could contribute value to the combined group. Nevertheless, we are willing to consider different alternatives regarding the perimeter of the assets and liabilities in order to facilitate the success of the transaction”, said Barceló.

Three months to reach an agreement

The offer, which is non-binding and conditional upon a due diligence (detailed analysis) provides for a period of “up to 3 months for the completion of this work, to reach an agreement between the two parties and submit a transaction to our respective governing bodies for definitive approval”. In fact, Barceló said that he is willing to consider alternatives with respect to the perimeter of the operation to facilitate it.

If the proposal ends up going ahead, it would result in the creation of the largest Spanish hotel group, ahead of Meliá, which at the end of 2016, had 375 hotels and 96,369 rooms. It would become one of the largest players in the sector in Europe, behind only the British firm InterContintental and the French company Accor.

Barceló has engaged Santander as financial advisor for the operation and has not hired any legal advisor.

NH views the offer with suspicion

From the get-go, the offer has been viewed with suspicion by NH, which indicated to the CNMV that it had received “an unsolicited, preliminary and non-binding expression of interest” from Barceló for the merger of the two businesses.

According to this offer, Barceló would have “a majority on the administrative board”. Moreover, NH reminded the regulator that its Board of Directors recently approved a 3-year strategic plan “involving an independent project for significant growth, which is still valid today”.

NH’s largest shareholder is the Chinese giant HNA, which holds a 29.5% stake, but it is not represented on the Board of Directors following its expulsion last year due to a conflict of interest. After HNA is the British fund Oceanwood, with a 12% stake; and Hesperia, the chain chaired by José Antonio Castro, with a 9% stake.

Analysts think the merger makes “strategic sense” 

Analysts at Renta 4 and Bankinter agree with Barceló that the operation makes “strategic sense”.

Original story: Expansión (by Rebeca Arroyo and M. L. Verbo)

Translation: Carmel Drake

Funds Snatch Leadership in Hotel Investment from Socimis

2 November 2017

The Spanish sector is experiencing its moment of glory this year. Forecasts indicate that the number of visitors will reach 80 million, a record that will place Spain ahead of France in the rankings. This, added to the positive operational data coming from the hotels, has led investment funds to intensify their commitment to hotel assets, taking the lead from socimis as the principal investors in the sector. Thus, compared to last year, the disbursement of funds to acquire hotel establishments or platforms has grown by 119%, to exceed €1.25 billion at the end of October, compared to 569 million that was transacted throughout 2016.

In the same period, the socimis have decreased their activity by 76%, going from being the leading investor in the area last year, with 26.3% of the total investment amount, to accounting for only 5.26% of the total disbursed by the end of October this year, according to JLL’s data.

The leadership of the socimis in recent years has been buoyed by Hispania’s intense activity, which in just three years has managed to position itself as the principal non-operating owner of hotels in Spain, with 11,296 rooms spread over 39 establishments. The company owned by George Soros has until the end of the year to continue to increase its portfolio, and as explained Javier Arús, the socimi’s director of investments in the hotel segment, it has 200 million euros for new purchases during this period.

However, another socimi, Foncière des Régions, starred in the most significant operation of last year. The French company took over Merlin Properties’ hotel portfolio for 539 million euros, and positioned itself as the primary investor of 2016, snatching at the last moment the title from the platform HI Partners (HIP), which at that time still belonged to Sabadell and had closed operations for a volume of just over 223 million euros. This year, the firm has slowed down a bit and to date has paid out 179 million for new assets.

In 2017, however, the funds have been the undisputed leaders, and Blackstone has managed to position itself first by buying, precisely, HIP for €630 million, attracted by its mainly tourism-based portfolio. With this, the fund retained the necessary structure to manage other hotel assets that it already had in its portfolio, such as those of Banco Popular and future acquisitions that could be made in other countries such as Italy and Portugal.

KKR is another of the funds that have moved into the market by purchasing the Mallorcan chain Intertur Hotels together with Dunas Capital. Its portfolio of five hotels will be managed by Alua Hotels & Resorts, which is backed by another fund, the British Alchemy Special Opportunities. The also British Benson Elliot entered the hotel rankings at the beginning of the year with one of the most sizeable operations of 2017, when it acquired the hotel Silken Diagonal, in Barcelona, for 65 million euros.

On the other hand, the activity of private investors has been growing year after year, with an increase of 78% over the last two years, nearly assuming the dealership position, only losing out to investments funds after Blackstone’s operation.

Original Story: elEconomista.es – Alba Brualla

Translation: Richard Turner

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

Aina Hospitality Plans To Invest €600M In Second Fund

18 July 2017 – Expansión

Aina Hospitality, the management company that specialises in the hotel sector, and which is driven by the wealth management group Edmund de Rothschild, is preparing a new fund. On 15 September, the company will launch Aina II, which will have an investment capacity of €600 million and which will focus on superior four-star and five-star hotels.

The launch of this second investment vehicle tightens relations between Aina Hospitality and Edmund de Rothschild. Both parties have created a joint company through which they seek to boost investment funds in the hotel sector every three years. “Edmund de Rothschild collaborates with management companies that specialise in different sectors; now we are joining this group of associates”, said the President of the company, Jaime Tàpies.

Aina Hospitality will begin raising funds in September and the process is expected to take a year and a half, with the first window closing in March 2018. The aim is to secure investment of €300 million and to double the capacity through debt financing (leverage).

“The funds that invest in hospitality are usually of an institutional size; we are one of the few funds that provides an opportunity to medium-sized private investors”, said Tàpies. Aina’s first fund established a minimum entry investment of €1 million. No minimum ticket has been set for this new vehicle yet, although it will probably be somewhat higher than that of its predecessor.

The yield on Aina II will amount to around 12% per annum On the other hand, the rental income will contribute 8%, whilst the appreciation in the value of the real estate assets may vary between 3% and 7%. The fund’s life cycle will be seven years, which may be extended by two more years: “That does not mean that all of our investments will remain in the portfolio for the duration. The average life of an operation tends to last for between five and six years”.

The company plans to undertake between 15 and 20 operations and will apply a similar risk policy to that of the previous fund. “We will not invest more than 25% of the fund in a single country or city”, he explained. The company is expanding its radius of operation to 35 cities in Europe, including countries outside of the Eurozone such as the United Kingdom, Switzerland and Scandinavia.

Aina has a special interest in Barcelona and Madrid. “Occupancy rates cannot grow much more, but we do see a lot of potential in terms of property prices”, said Tàpies, who added that demand is continuing to grow by more than supply in both cities. Nevertheless, he said that, nowadays, there are other more interesting cities such as London, Paris, Rome and Milan.

Original story: Expansión (by Gabriel Trindade)

Translation: Carmel Drake

KKH Has Spent €500M+ In Spain & Wants To Invest More

17 July 2017 – El País

After the abrupt collapse of the real estate sector following the burst of the bubble, it was five years before capital returned to the industry. And it did so five years ago, when the recovery in the sector was based essentially on investment funds with foreign names, which bought anything ranging from portfolios of properties from the administrations to buildings that were weighing down heavily on the banks. One of the funds that arrived then was the KKH Capital Group. Rather it made its return to Spain then.

The instrument was led by the person who until 2007 had been the CEO of Renta Corporación, Josep María Farré. He returned to Spain after a six-year break with the intention of building a portfolio of properties exceeding €300 million. Five years later, and after joining the US fund Perella Weinberg, the resulting alliance, KKH Property Investors has now spent €500 million and is considering expanding its financial muscle to continue acquiring buildings.

After undertaking acquisitions in Barcelona and the Balearic Islands, KKH recently entered the Spanish capital. There, it purchased the former headquarters of the Caja Madrid Foundation, in Plaza de las Descalzas, which it is going to convert into a 170-room luxury hotel. The building, which has a surface area of 25,000 m2, spread over seven floors and another two parking floors, could be operational by 2019 (…).

Buying and renovating

This acquisition fits perfectly into the company’s business model, which, unlike other funds, does not just sit back and wait for its properties to appreciate in value, but rather seeks to increase their value through renovation and, in most cases, changes of use. On paper, the model is similar to that employed by Renta Corporación, but sources in the sector highlight a significant difference: the real estate company used to try to hold onto properties for the shortest time possible. When the crisis hit, that logic became impossible.

The same operation that it undertook in Madrid – the transformation of a property into a large luxury hotel – was frustrated in Barcelona with the election of Ada Colau as mayor of that city. The group had acquired the iconic Deutsche Bank building, on Paseo de Gràcia, for around €90 million, according to market sources. That establishment was going to be managed by Four Seasons and was going to be another magnet to attract new investment to the area. In parallel, KKH was developing other hotels in the city. For example, it is still planning to open an establishment close the Santa Caterina market, under the Edition brand from Marriott International and the businessman Ian Schrager, by the end of this year.

Not in vain, hotels are one of the most sought-after assets at the moment, given the pull of the tourist sector. According to the consultancy firm CBRE, last year, investors spent €1,706 million on these assets in Spain after a record year in 2015, when they spent more than €2,000 million.

Nevertheless, when Colau’s team came to power, KKH withdrew from the hotel after her party opposed the project during its campaign and decided to build luxury apartments in its place. Barcelona’s new hotel plan, which prohibits new openings in the centre, has forced the fund to shift its focus. “New hotel projects in Barcelona are complicated. The areas where they can be built are not ideal for such use, but we have the vocation to continue operating in the city. We will adapt to the political situation and I am sure that we will continue”, said Enric Venancio, CEO at KKH. He added that besides Madrid, another key destination for the firm is Ibiza, where it started work last year on the construction of a luxury establishment.

In addition to hotels and luxury homes – (…) this fund has a third string to its bow, in the commercial segment. In an unprecedented operation in the Catalan capital, the fund is immersed in the conversion of the former Montecarlo hotel, on La Rambla, into a commercial space. (…).

Original story: El País (by Lluís Pellicer)

Translation: Carmel Drake

Luxury Home Developer Caledonian Plans To Enter Hotel Segment

5 June 2017 – La Vanguardia

The luxury housing company Caledonian is planning to expand its activity into the hotel sector, with the construction of a vacation complex on the Costa del Sol, according to comments made to EFE by the President of the company, Enrique López Granados.

The complex will be located “between Algeciras and Marbella”, although López Granados chose not to specify the exact location because the project is still in the negotiation phase.

López Granados, who recently unveiled a luxury housing development in Pozuelo (Madrid), also confirmed that Caledonian has purchased the Javier Ferrero building in Madrid for €9 million.

The building will be refurbished and then the real estate company is expected to generate between €25 million and €30 million from the sale of the homes.

Caledonian is also interested in constructing social housing properties in Madrid, although the property developer has not found an appropriate location for that yet.

“The aim is to construct around 2,000 homes to be sold for around €2,000/m2”, explained López Granados.

The President of Caledonian said that the yield that the real estate company obtains from its activities is “small”, close to 15%, given that the homes that it sells “are expensive because it costs a lot to build them”.

The 21 homes that Caledonian has constructed in Pozuelo and that López Granados unveiled last week cost between €500,000, for the cheapest, and €1.5 million, for the most expensive.

“I also think that this is a great time for the luxury sector, given that people are starting to buy again”, said López Granados.

The Director also said that Caledonian would like to expand into other geographical areas, such as Barcelona. Nevertheless, he clarified that the real estate company has not yet found “any appropriate plots of land to be able to build on”.

“If we could find appropriate plots of land, we would not have any problem starting projects in other places”, he said.

Nevertheless, López Granados said that constructing in other areas “requires additional effort”, and for that reason, he prefers “places that he already knows such as the Costa del Sol and Madrid”.

Caledonian is a property developer and construction company that specialises in the luxury property sector. It has constructed projects in locations such as Somosaguas (Madrid), Aravaca (Madrid) and Ibiza.

Original story: La Vanguardia

Translation: Carmel Drake