NH Early Redeems A Bond Issue To Reduce Its Debt By €100M

31 October 2017 – Expansión

The NH hotel chain has reduced its debt by €100 million after early redeeming the entirety of a debt obligation issue made in 2013. The issue, amounting to €250 million in total, was due to mature in 2019.

NH has explained that the redemption will be performed on 30 November and will be charged against available cash and, temporarily, through short-term credit lines. Following the operation, the company’s long-term gross financial debt will stand at around €740 million.

The hotel group has explained that this operation will allow it to achieve a net interest saving of around €9.6 million between 30 November (2017) and 1 November 2019, the obligations’ maturity date.

“The redemption and cancellation of the obligations represents a significant milestone in the company’s strategic plan, and seeks to reduce the gross amount and average cost of its indebtedness over the long-term, as well as to prolong its average life”, says NH.

Specifically, with this redemption and without considering the temporary use of short-term credit lines, the average cost of NH’s debt will reduce from 4.2% to 3.8%, whilst its average life will lengthen from 4.4 years to 4.7 years.

Moreover, as a consequence of this redemption, the syndicated credit line signed in 2016 for a limit of €250 million will continue to be available in its entirety, and its maturity is extended automatically until 2021.

In this way, NH is finalising the process to refinance its long-term debt and will hold onto a €250 million convertible bond, which is due to mature in November 2018, as medium-term debt.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

The Seven: Sotogrande Unveils Its Latest Ultra-Luxury Villas

11 April 2017 – Cinco Días

Unless you have €5,000 a month to spent on the service charge, then these exclusive villas are not for you. In fact, they are a concept that has rarely been seen anywhere in the world: a residential development comprising seven homes, each of which is going to be designed by an internationally-renowned architect, in a natural setting designed by a famous landscaper. The development is called The Seven. And it is the latest ultra-luxury initiative in Sotogrande, San Roque (Cádiz).

Sotogrande is undergoing a complete transformation. Established in 1962 by the millionaire Joseph Rafael McMicking, a businessman of Filipino origin, it quickly became one of the poles of attraction for domestic and overseas millionaires alike. Following the purchase from NH Hoteles in 2014 by the funds Cerberus and Orion, for €225 million, the management company has spent a while reflecting on what this urban complex in the Mediterranean should look like in the future. And the answer came from the past. “When you look at the history of Sotogrande, everything revolves around exclusivity and quality”, explains Marc Topiol, CEO of the company. (…).

The villas will crown a small outcrop in one of the highest areas of Sotogrande, with views over the sea, in the closed reservation of La Reserva, spanning 467 hectares. Construction of these dream homes, in the middle of this natural setting, will begin this year, with the aim of selling the properties by 2020.

The company has chosen seven internationally renowned architects to integrate their designs into The Seven (…).

A home in The Seven will cost between €14 million and €18 million. Each property will have a surface area of between 1,800 m2 and 2,400 m2, with the main bedroom measuring more than 120 m2. All of the homes will be equipped with everything a millionaire could wish for: a private spa, indoor and outdoor swimming pools, a cinema and gym. “We will take care of everything. From paying bills to maintaining the garden and the home, opening up the home when the owner so requests, daily room service, chef, shopping, cleaning, restaurant reservations, transport, it will be live living in a hotel”, says Topiol. All for €5,000 per month (excluding extras).

In addition, residents will enjoy use of the shared facilities that Sotogrande has designed for La Reserva: a spa resort, one of the largest navigable lakes in Europe, tennis courts, golf, an artificial beach, a beach club….in an investment made by the company amounting to €40 million. Not to mention the well-known facilities at the urban complex, such as the Santa María Polo Club, horse riding facilities, the port and the famous golf courses, such as Valderrama and Real Club de Sotogrande. (…).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Hispania Acquires Hotel NH Málaga For €41M

13 February 2017 – Expansión

Hispania, the Socimi in which George Soros owns a stake, has purchased a hotel in Málaga from the NH Hotel Group for €41 million. The establishment, which NH will continue to operate under a lease contract, currently contains 133 rooms, although an extension is planned to add another 112 rooms, which is expected to be completed by June 2019.

The operation will be structured in two phases. On the one hand, Hispania will purchase the asset and sign a long-term lease contract with NH. On the other hand, the Socimi will bear the cost of the investment to improve and expand the hotel. The contract signed with NH provides for the payment of a fixed sum during the first two years, which will be complemented by a variable component, calculated on the basis of income, once the extension has been completed.

Hotel NH Málaga, which has been owned by NH since 1999, has 133 rooms (overlooking the street), nine meeting rooms for events, as well as a restaurant, two terraces and a gym.

Sources at NH have explained that the agreement forms part of its asset rotation strategy and allows it to still benefit from the property’s potential through its operation.

This operation forms part of Hispania’s plan to focus on hotel assets, whilst at the same time divesting from residential assets and rotating its offices. Specifically, in addition to this asset, the company is set to soon close operations amounting to around €200 million and has others worth more than €1,400 million in the pipeline.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

CaixaBank Sells €700M In Debt & Foreclosed Hotels To Apollo

29 December 2016 – El Confidencial

CaixaBank is going to close 2016 with a healthier balance sheet, thanks to the latest divestment operation that it is about to sign. According to financial sources, the banking institution led by Gonzalo Gortázar (pictured above), has reached an agreement with Apollo Global Management to sell €700 million in foreclosed assets linked to the hotel sector. The US fund is hereby going to acquire 20 four- and five-star holiday establishments that the bank has been holding in its portfolio following non-payments by customers.

The transaction, which has been dubbed Project Sun, is just awaiting the finishing touches from CaixaBank and Apollo, the opportunistic fund that purchased 84% of Banco Santander’s real estate company – Altamira – for €664 million and all of Evo Banco, which previously belonged to the former Novacaixagalicia for €80 million, amongst other things. Nevertheless, the agreement between the bank headquartered in Barcelona and the NYC-based firm is limited to two thirds of the portfolio that was initially put up for sale.

The Spanish financial institution, which has been advised by Alantra, had valued Project Sun at around €1,000 million, on the basis that it contained, on the one hand, unpaid loads secured by 112 hotels; and, on the other hand, 32 establishments that the bank had foreclosed due to non-payment. According to the internal documentation from the sales notebook, in total, 11,000 rooms were put up for sale, the largest hotel portfolio of the year. But at the last minute, the entity has decided to get rid of debt amounting to only around €350 million and 20 hotels worth a similar figure, which means that 12 properties have been left out of the agreement with Apollo Global Management.

The reason is that the offers that it received for these other holiday establishments were well below their respective book values, and so they have chosen to not sell them now so as to sell them for a bad price. Most of the hotels and loans are located in Andalucía (37), Cataluña (22) and the Canary Islands (19). Besides Apollo, which has been advised by Arcano and by Gustavo Gabardo, former Director General of NH Hoteles, CaixaBank had also received interest for this portfolio from other so-called vulture funds, such as Starwood, Cerberus, Oaktree and Bank of America, which had already acquired assets from Bankia, Santander, Sareb and Sabadell.

With this transaction, CaixaBank is going to close the year with €2,400 million less in terms of overdue debt, having already completed the sale of other non-performing loan portfolios. On 30 November, it got rid of the portfolio known as “Far”, which it sold for €700 million to Lindorff and D. E. Shaw. In July, it did the same with another package of unpaid credits for €900 million (Project Carlit), which it sold to Goldman Sachs and D. E. Shaw. (…).

This is the eleventh operation of its kind that CaixaBank has completed since it started to try to remove toxic loans from its balance sheet. (…). Over the last two years, it has managed to get rid of non-performing loans amounting to almost €6,000 million, a strategy that has allowed it to reduce its default rate from almost 12% at the height of the financial crisis to just 8.7%.

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake

Merlin Finalises The Sale Of Its Hotels For €500M+

28 December 2016 – Preferente.com

Merlin, a company listed on the Ibex 35, is finalising the sale of its hotels to the French Socimi Foncière des Régions, for a figure that exceeds €500 million. Advised by CBRE, it will be the largest operation carried out by a Socimi in 2016, excluding the integration of Merlin and Metrovacesa.

The portfolio of properties contains 29 hotels operated by different chains, including the Eurostars Grand Marina in Barcelona and the NH Sanvy in Madrid (pictured above). The hotels that share buildings with offices will be left out of the transaction, such as the Eurostars Torre Castellana, which is located in the Torre PwC, and the Novotel de Barcelona, which is next to Capgemini’s headquarters. The hotels have come from corporate operations with Testa and Metrovacesa.

In 2015, Merlin acquired Testa, the real estate subsidiary of Sacyr, for more than €1,790 million. As part of that transaction, it bought 12 hotels, valued at more than €380 million at the time. As a result of the integration of the tertiary assets of Metrovacesa, a deal that was closed this year, another 12 hotels, worth €258 million, were transfered to Merlin. In total, the Socimi has 4,495 rooms, in establishments operated by Barceló, Meliá, AC Hotels, Tryp, Holiday Inn, NH Hoteles and Exe. The Carris Marineda hotel in A Coruña and the Socimi’s 30% stake in Barceló Costa Ballena in Cádiz have been left out of the transaction. Moreover, Merlin already sold off one hotel in Perpignan (France).

The hotels account for around 7% of Merlin’s asset portfolio, worth €9,300 million in total and will generate expected revenues of €450 million following the integration of Metrovacesa approved in September. The properties are home to hotels such as the NH Collection Colón, the Paseo del Arte, Exe Puerta Castilla, Eurostars Gran Madrid, and Barceló Castellana Norte, all in Madrid. In Barcelona, the portfolio includes AC Forum and Tryp Aeropuerto, amongst others. In other locations, Merlin owns the Holiday Inn and Tryp Oceanic, both in Valencia, Playa Capricho (Almería), Costa Park and Tryp Alameda (Málaga), Tryp Jerez, and Barceló Corralejo (Las Palmas).

Original story: Preferente.com

Translation: Carmel Drake

NH Finalises Agreement To Manage 28 Hesperia Hotels

5 December 2016 – Expansión

NH is finalising an agreement with the President of Hesperia, José Antonio Castro, which should be signed within the next few days. According to reports from sources close the negotiations, the purpose of the agreement is to renew the hotel chain’s management of almost thirty establishments, owned and operated by Hesperia, for the next nine years.

NH will renew the management of twenty-eight of Hesperia’s hotels, all of which are located in Spain. The agreement also establishes that NH will no longer manage two hotels in Venezuela.

According to the conditions recorded in the memorandum of understanding, NH will pay €31 million for the right to manage Hesperia’s hotels, which will be split into three payments. NH could receive up to €8 million in annual commissions for the management of these properties.

Castro has also committed to investing almost €30 million on the improvement and repositioning of the hotels, and on replacing the Hesperia brand with the NH brand. Moreover, the agreement includes guarantees in the event that Castro does not fulfil some of the clauses set out in the agreement. In this case, NH would have access to a stake in Hesperia’s hotels worth around €40 million.

The negotiations have been going on for almost four months and have been fraught, given that Hesperia is a key shareholder of NH. Hesperia, which first left the management of its hotels in the hands of its investee company, NH, at the beginning of 2009, is the hotel chain’s third largest shareholder with a 9% stake, behind the Chinese group HNA (29.5%) and Oceanwood (12%). The conditions presented by Castro were approved by NH’s Audit Committee, which is chaired by Koro Usarraga Unsain, and received unanimous support from NH’s Board of Directors, in which nine of the eleven members voted, given that neither Castro nor Francisco Javier Illa, who are representatives of Hesperia, participated in the negotiations.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

HNA Seeks To Strengthen Its Position On NH’s Board

15 June 2015 – Expansión

The Chinese giant, which holds a 29.5% stake in the NH Group and has four directors on the Board, will ask the other shareholders to fix the number of board members at 11, in order to limit the advances of foreign funds.

HNA, the primary shareholder of the NH Group, with a 29.5% stake, will ask the hotel group to fix the number of members on the Board of Directors at 11, at the AGM on 29 June. HNA justifies the proposal, which has been included as an additional item on the meeting agenda, as being “in the interest of greater legal certainty”.

With this proposal, HNA is flexing its corporate muscles and seeking to close the door on NH’s foreign fund investors, by making the incorporation of new directors conditional on existing positions becoming vacant.

Currently, NH’s Board of Directors comprises 11 people, even though the company’s bylaws provide for a minimum of five members and a maximum of 20…The Chinese group already holds four seats on the Board and the Hesperia investor group has two. There are three independent directors and the Chairman (Rodrigo Echenique) and CEO (Federico González) also hold a seat each (…).

In order to stand up to NHA, three overseas fund managers (Oceanwood Capital, BlackRock and Henderson) purchased most of Banco Santander’s shares, which were sold on 21 May. Soon afterwards, Oceanwood, which holds a 7.7% stake, formally requested to join NH’s board (…).

The fear of the funds (minority shareholders) is that, if there is no increase in the number of independent directors, then HNA will strengthen its control over NH without having to launch a takeover bid (OPA) for the shares (…).

On the other side of the table is HNA, an Asian giant, which has demonstrated its desire to take control of the Spanish chain, since it first acquired a stake in the group in 2013. It seeks to continue as a major shareholder, but without acquiring 100% of its shares (…).

In parallel, HNA has opened the door to the Asian market to its investment company. Both companies created a joint venture with a Chinese majority, which will allow NH to debut in the country. In 2015, the Spanish chain will manage six hotels (in China) and the aim is to exceed 30 properties under management over the medium term.

Meanwhile, NH is continuing to improve its results. Between January and March, it generated revenues of €272.3 million and reduced its net losses by 24.7% to €29.1 million. On Friday, NH’s share price was down by 1.63% to €5.11.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Barceló’s Goals For 2015: Buy 100% Of Occidental & Double Profits

8 June 2015 – Expansión

Interview with Simón Pedro Barceló, Co-President of the Barceló Group / Having acquired a 42.5% stake in Occidental Hoteles from minority shareholders, Barceló now wants to take control of the chain. It will invest €180 million refurbishing its hotels.

Barceló is stepping on the accelerator. Having used the crisis to refurbish its hotels and make a return to the travel business, the hotel group is now looking to expand. With this objective in mind, Barceló joined forces with the Socimi Hispania at the beginning of the year, to create the first dedicated hotel listed investment vehicle.

(…)

Through the creation of the Socimi, Barceló will complete several milestones in one deal. On the one hand, it has opened the door to growth, since the investment vehicle aims to double its size. On the other hand, the Mallorcan group will reduce its real estate exposure, which had reached the highest value in its history. Barceló will transfer 16 hotels and two shopping centres worth €421 million to the Socimi, and will retain a 19.5% stake in the company. “The operation reduces debt and frees up resources”, said Simón Pedro Barceló.

Barceló has already started to use some of those “freed-up” funds. In May, it acquired 42.5% of Occidental Hoteles from Amancio Ortega, owner of Inditex, and other minority shareholders. The next step is to sign an agreement with BBVA, which owns the remaining shares. According to Barceló, “Occidental’s shareholders launched the process and that means they want to sell. Barceló is willing to acquire 100% and that is feasible in the short term”.

The acquisition of Occidental will increase Barceló’s portfolio to include 14 additional hotels and 4,584 rooms in the Caribbean: “It strengthens our business in Mexico, the Dominican Republic and Costa Rica, and it opens us to new markets, such as Aruba”. Nevertheless, the operation will entail an investment of USD 200 million (around €180 million) to modernise Occidental’s hotels.

In addition to the deal with Occidental, Barceló’s other objective is to improve its results. In 2014, its gross operating profit (EBITDA) amounted to €216.7 million and its net profit was €46.4 million, up 85.6%.

This year, “we hope that EBITDA will reach €250 million and net profit will double to €100 million; that would make us the leader in the market in terms of profitability, ahead of Melia and NH”. (..)

Regarding the good times that the Spanish tourism sector is currently experiencing (the number of international visitors make break historic records this year), Barceló says that “Spain is a volume destination and that cannot be ignored; from there, we seek to make the market as profitable as possible”. (…).

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Bankia Sells Hotel Loan Portfolio To BofA & Hedge Fund

5 June 2015 – Expansión

Project Castle / Following the sale of Realia, Bankia has now made profits of €926 million from the transfer of its investments.

Yesterday, Bankia closed the first sale of a loan portfolio since the regional and local elections, which have been threatening to destabilise the market. Far from that, the entity has managed to attract a US hedge fund (to the market), which has not closed any deals in Spain until now, namely: Davidson Kempner Capital Management (DK Capital).

This fund and Bank of America (BofA) have won the auction for Project Castle against other large international investors. This portfolio, whose sale has been advised by N+1 and the law firm Ramón y Cajal, comprises hotel loans worth €383 million. In total, the portfolio contains 91 loans linked to 45 properties of this type.

Bank of America will take ownership of the performing loans and DK Capital the doubtful loans. These types of hedge fund are renowned for carrying out aggressive restructurings of loans to take ownership of the assets and, subsequently sell them at a profit.

Optimisation

Sources at Bankia highlight that the transaction: frees up resources for the granting of new credit; increases the bank’s liquidity; and contributes to an improvement in the quality of the assets. Moreover, it will have a positive impact on capital (at the height of the Basel III implementation) amounting to €21 million.

As well as Project Castle, Bankia is also advancing with Project Big Bang, containing €4,800 million foreclosed assets for sale; and Project Wind, with €1,300 million doubtful loans, primarily mortgages to individuals.

These divestments come after Bankia sold its 24.9% stake in Realia to Carlos Slim on Wednesday. Bankia has now made profits of around €926 million on the sale of all of its investments in listed companies, such as Iberdrola, Mapfre, Deoleo and NH Hoteles.

The transactions closed since 2013 have generated revenues for the entity of €4,879 million, according to the company’s own data.

Having exited as a shareholder of Realia, Bankia now only retains minor industrial holdings, such as in the infrastructure concession group Globalvía, in which it holds a 50% stake alongside FCC, although these two shareholders are expected to close the sale of that company to the Malaysian sovereign fund during the course of this year.

Original story: Expansión (by J. Z.)

Translation: Carmel Drake

Who Are The New Property Owners?

20 April 2015 – Expansión

Plans / International funds and Socimis are the main players in the sector

Apollo, Blackstone, Cerberus, HIG, Hispania, Intu, Lone Star, Merlin and Oaktree have gone from being virtually unknown names to being the key players in the Spanish property market (in a matter of months).

Over the last year and a half, large international funds have been investing hundreds of millions of euros in the purchase of property in Spain, both directly as well as through listed real estate investment companies (Socimis).

Värde, Apollo and Lone Star all burst into the market by purchasing real estate platforms from financial institutions. The latter has said that it wants to become the largest land developer in Spain and to that end, it is considering purchasing not only portfolios of land but also small and medium-sized (land) developers. Lone Star has already purchased the real estate arm Neinor from Kutxabank for €930 million, as well as Eurohypo’s loans in Spain for a further €3,500 million.

HIG and Castlelake are looking to buy land in Spain too.

Another investor that is backing Spain with more strength than ever is Blackstone. The largest fund manager in the world has purchased 1,860 homes for rent, as well as a group of office buildings, located in Madrid and Barcelona. One of the players that is most interested in the office market is the Spanish fund Meridia Capital, led by the former Sareb (director) Juan Barba; it has purchased a portfolio of office buildings from General Electric. It is competing against IBA Capital – the French manager has created a Socimi, which has not yet been listed, with headquarters and commercial buildings.

Along with these offices, the other assets that are sparking the most interest amongst investors are shopping centres. Green Oak has already invested €160 million together with Baupost on the acquisition of 6 properties from Vastned. The British group Intu wants to become the leading player in this segment in Spain and to that end, it paid €451 million for Puerto Venecia. Oaktree spent €100 million on Gran Vía de Vigo.

Other important players in this new era for the real estate sector are Socimis. Axia RE, Hispania, Lar España and Merlin have invested almost €3,000 million in assets, which include hotels, offices, logistics centres and warehouses. This last type of asset is attracting considerable interest. The fund Colony has just formed a partnership with the Spanish company Neinver to purchase 16 logistics warehouses.

Finally, in the hotel segment, Cerberus and Orion have purchased Sotogrande, the real estate subsidiary of NH for €225 million.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake