Meliá Finalises Sale & Leaseback of Palacio de Congresos Hotel in Valencia

20 July 2018 – Las Provincias

The tallest skyscraper in Valencia is on the verge of changing hands. The sale of Meliá’s Palacio de Congresos Hotel, located on Avenida de las Cortes Valencianas, number 52, is being finalised for €50 million, according to sources speaking to Las Provincias. The operation is expected to be signed in September and several investors have expressed their interest in acquiring the former Hilton Hotel.

The owner of the iconic property, the fund Colony Capital, took just two months to put it on the market after acquiring it in February when it purchased the fund Continental Property Investments (CPI), the former owner of the hotel. According to the same sources, the candidates to acquire the building now include Socimis, institutional investors and family offices, such as the Valencian Zriser group, the firm owned by Pablo Serratosa. Another interested player is AXA Real Estate, the company that acquired the Hilton Hotel Diagonal Mar in Barcelona last year.

Despite the change of owner, the management of the hotel will continue to be entrusted to Meliá, which signed an extendable 10-year operating contract in 2011. It is a strategic asset for the hotel group, given its location next to the Palacio de Congresos, which makes it the best-positioned accommodation on the market for business people and guests of events organised in the Valencian enclave.

A yield of 5%

According to sources familiar with the operation, the asking price for the hotel was €45 million, which was the “minimum to make an offer”. Nevertheless, the market was pricing it at around 10% more, approximately €50 million and some even think that it will be sold more than that. “Socimis and institutional investors look for yields of 5% per year”, they reveal.

In addition, the sale price per room will range between €165,000 and €175,000. In terms of the price per overnight stay, hotels of this kind with an occupancy rate of 80% typically range between €90 and €95 per room. The expectation is that the former Hilton will cost around €100 per night in five years time.

The former Hilton is a 5-star hotel that opened its doors to the public in May 2007. It stands 117 m tall and has 29 storeys, with 269 rooms, 33 suites and two presidential suites. Moreover, it has a convention room and 18 meeting rooms. The building was constructed between 2002 and 2006 at a cost of €110 million, double the price at which the owners want to sell it for now. It was in 2010 when the owner company, the firm Hotel Palacio de Congresos SL, sold the property to CPI to avoid its definitive closure after that company filed for voluntary creditor bankruptcy.

Original story: Las Provincias (by Elísabeth Rodríguez)

Translation: Carmel Drake

Starwood & Carlyle Bid for San Fernando Business Park (Madrid)

11 May 2018 – Expansión

One of the major real estate operations of the year in the office segment is entering the home stretch.

The US fund Oaktree, which engaged the real estate consultancy CBRE to coordinate the sale of San Fernando Business Park, has been receiving binding offers for this office complex, located in San Fernando de Henares, in the east of the Community of Madrid.

The international investors that have expressed their interest in the asset include the investment fund Starwood Capital and the private equity firm Carlyle, both of which have submitted binding offers and so entered the final round of bidding for the business park.

Oaktree acquired the San Fernando Business Park three years ago, when the US fund purchased a portfolio of unpaid debt worth €750 million from the German bad bank FMS Wertmanagement (FMS WM), which included, in addition to the office complex: luxury hotels, such as the Arts Hotel in Barcelona and another establishment in Cascais (Portugal); five shopping centres, including two in Madrid (Plaza Éboli and Heron City Las Rozas); several storeroom buildings; and other residential and industrial assets.

San Fernando Business Park comprises 13 buildings and spans a total surface area of 86,000 m2, as well as 2,500 parking spaces.

Moreover, the business complex boasts 40,000 m2 of green space and recreational areas. San Fernando Business park is accessible directly from the A2, M45 and M50 motorways and its onsite facilities include a gym, banks, a children’s nursery, meeting rooms and an auditorium.

Office market

As we wait to see how the sale of Hispania’s office portfolio pans out, which is worth almost €600 million but which is up in the air due to the takeover bid (OPA) that the US fund Blackstone launched for the Socimi, the purchase of San Fernando Business Park looks set to be one of the most important operations of the year in the office segment.

Investment

Last year, investment in the office segment amounted to €2.3 billion, less than half the previous year, due to less activity by the Socimis, a shortage of supply in good locations and the challenge for investors to find the desired returns.

So far this year, investment in the office segment has accounted for 42% of the total transacted volume, reaching €1.72 billion, given that the figure includes Colonial’s takeover of Axiare, which was successfully closed in February and which has caused the investment figure to soar.

More than 600,000 m2 of office space was leased in Madrid last year, which represents the best figure in the last decade, whilst in Barcelona, 345,000 m2 of office space was leased during the same period.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake