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

7 November 2017 – Expansión

The extraordinary tourism data in Spain, the interest from investors in real estate assets and the purchase by international funds of hotel portfolios has catapulted investment in the Spanish hotel segment so far this year to €2,600 million. That figure is 21% higher than the total amount recorded in 2016, and is very close to the record figure of €2,700 million recorded in 2015, according to The Hotel Property Handbook report, prepared by Deloitte España.

In this way, the hotel sector now accounts for 35% of total real estate investment in the tertiary sector (non-residential assets) in Spain. The firm forecasts that, by the end of this year, the investment volume figure will have easily surpassed the €3,000 million threshold.

In terms of the main operations of the year, the purchase by the US fund Blackstone of the HI Partners hotel portfolio, comprising 14 establishments, from Sabadell for €630 million and the acquisition by the British fund London & Regional of four Starmel hotels – a joint company formed by Meliá and Starwood Capital in 2015 – for €230 million, have given the investment figure a real boost.

Record operations

These operations have been accompanied by several one-off hotel transactions, such as Edificio España, which was acquired by RIU in June for €272 million (…).

Other noteworthy operations so far this year include the purchase of Hotel Silken in Barcelona by the British fund Benson Elliot for €80 million and the acquisition of 55% of Hotel Diagonal Mar in Barcelona by Axa for €80 million.

For Javier García-Mateo, Partner at Deloitte Financial Advisory, institutional investors are seeing the opportunity to build large portfolios of holiday hotels in Spain, to integrate them into their international platforms in the Caribbean, South America and South-East Asia, developing a direct channel and obtaining greater negotiating power with tour operators. “In the end, Spain is establishing itself as the world’s main tourist market”, he says.

In this sense, we are seeing the natural migration of traditional hotel owners, who are divesting property to focus on management, such as in the case of the Meliá chain, which is making way for overseas investors who have greater financial muscle and so can launch more ambitious projects, explains Patricia Pana at Deloitte Financial Advisory.

In this context, the large tour operators are also participating in the investment fever and are buying assets in order to carry out a vertical integration of their business (…).

Interest from investors is partly driven by the record number of visitor arrivals – more than 84 million international tourists are forecast to visit Spain this year – and the strong evolution of key performance indicators such as the average daily rate (ADR), revenue per available room (RevPAR) and the occupancy rate.

Peak returns

Specifically, the ADR in Spain reached an average of €82.30 in 2016, up by 5% YoY; the occupancy rate rose by four percentage points to 66%; and RevPAR increased by 10% to €53.90.

The challenges for the sector now include improving the hotel portfolio to allow for an increase in prices. “If we compare our hotels with those in other urban and vacation destinations, the price per room of Spanish hotels still has a lot of potential, provided that renovation and transformation projects are carried out with the help of the main operators”, says Ana Granado, Director at Deloitte Financial Advisory (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

The Courts Award Hotel Silken ‘Puerta De America’ To BALMI

21 March 2017 – El País

Commercial Court number 1 in Vitoria has awarded the Hotel Silken Puerta de América Autonomous Production Unit (UPA, comprising the assets, rights and obligations, workers, contracts and administrative licences, to Farmington Investments, S.L., a Spanish company headquartered in Madrid and owned in its entirety by Bank of America.

According to the magistrate’s ruling, dated 10 October 2016, the price of the hotel’s Autonomous Production Unit is €16,320,000, of which €326,400 corresponds to the organisation of the on-going business activity and the remainder to the two properties and their mortgaged facilities and furniture. Farmington Investments will pay €8,132,338.97 by way of consideration and €8,187,661.03 by way of transfer into the account that the bankruptcy administrator designates for inclusion within the active mass of the bankrupt Hotel Puerta de Castilla, S.A..

The loans that Bank of America Merrill Lynch Limited (Balmi) holds with the bankrupt company (approximately 51% of the bankruptcy liability) will be waived, with the exception of one sum, amounting to €8,132,338.97, which will be offset by the purchase price of €16.32 million. The acquiring contractor subrogates the Autonomous Production Unit in the contracts and administrative licences, as well as in the employment contracts for affiliated personnel, in accordance with the list contained in the hotel liquidation plan. (…).

The trading company Hotel Puerta de Castilla S.A. was declared bankrupt, along with other companies, by a ruling dated 8 July 2015 (Ordinary bankruptcy 374/15), and was subsequently accumulated into ordinary bankruptcy 512/14 of the companies Grupo Urvasco, S.A. and Grupo Hotelero Urvasco, S.A. The final texts were submitted on 18 March 2016, and on 5 May 2016, the liquidation notice was enacted. The bankruptcy administrator submitted the liquidation plan for the bankrupt companies on 20 June 2016, and that is currently pending approval. On 19 July 2016, the bankruptcy administrator submitted a letter evidencing the offer to acquire the Autonomous Production Unit (UPA) ‘Hotel Silken Puerta América’, issued by Farmington Investment, S.L., which had been accepted and approved by Bank of America Merrill Lynch Limited (Balmi), valuing it positively and explaining the reasons why the foreclosure should be carried out without any further delay and without waiting for the approval of the liquidation plan.

For the magistrate, “there is no doubt that the offer is extremely interesting” for the insolvency, given that the acquiring party subrogates the bankrupt company in almost all of the contracts signed by the latter in relation to the hotel and the transfer of all of the workforce, which ensures the continuity of activity, as well as the on-going employment of the workers. (…).

Original story: El País

Translation: Carmel Drake

HI Partners Invested €136M In 4 Hotels In July

8 August 2016 – Expansión

In addition to its two purchases in the Canary Islands (IFA Catarina and Hotel Jardín Tropical), it also acquired the luxury Hilton Sa Torre resort in Mallorca (pictured above) and the Hotel Abba Acteon in Valencia.

Four acquisitions in four weeks. That was the result of HI Partners’ activity in July, a month in which the company owned by Banco Sabadell, closed several deals that allowed it to incorporate 1,119 new rooms into its hotel portfolio in one fell swoop. It paid €136 million in total for the four operations, which allowed HI Partners to extend its presence to the Canary Islands and Mallorca for the first time, two of Spain’s main tourist destinations.

The company led by Alejandro Hernández-Puértolas has just completed the purchase of two establishments in Mallorca and Valencia, to add to the two acquired in the Canary Islands half way through the month. With these purchases, the investment and hotel management company’s portfolio of hotel assets now contains 28 properties and 3,352 rooms.

In Mallorca, HI Partners has purchased Hotel Hilton Sa Torre, a luxury resort located in Llucmajor, on a traditional Mallorcan estate that includes buildings dating back to the 14th century. The five-star property has ninety rooms and a spa, as well as several swimming pools, a tennis court and extensive gardens.

In parallel, at the end of July, the firm also acquired Hotel Abba Acteon, a four-star urban property located in the centre of Valencia, with 150 rooms.

These two purchases followed its acquisition of IFA Catarina, located in Maspalomas (Gran Canaria) and Hotel Jardín Tropical, located in Adeja (Tenerife).

Investment in renovation

The four hotels have increased the size of the HI Partners Value Added vehicle, which contains the jewels of the investor group’s crown. The division now owns eight assets. Alongside the two hotels in the Canary Islands and the new properties in Mallorca and Valencia, the fund also includes Hotel Silken in Málaga, the Terramar in Sitges (Barcelona), the Prestige Coral Plajta de Roses (Girona) and the future Hotel Axel in Madrid, which is currently under construction on Calle Atocha.

HI Partners plans to allocate an addition €20 million to the renovation and improvement of the properties it has acquired. All of them have received financing from Banco Sabadell, in other words, they form part of the €850 million hotel debt portfolio managed by HI Partners.

Original story: Expansión (by Sergi Saborit)

Translation: Carmel Drake