Marathon Buys an Office Building & a Hotel in Madrid for c. €30M

21 November 2018 – Expansión

The US investment fund Marathon is increasing its commitment to Spain with the acquisition of a mixed-use complex of buildings in Madrid, which houses an office block and a four-star hotel managed by the Mallorca-based chain Barceló.

Specifically, the US investment fund has closed an agreement with Credit Suisse Real Estate, owner of the asset until now, to acquire the complex for around €30 million, according to market sources speaking to Expansión.

The complex has a total surface area of 14,000 m2 and is located at numbers 19 and 21 Calle de Julián Camarillo in Madrid, one of the most established office districts in the east of the capital, a few minutes by car from the Ifema exhibition centre and Adolfo Suárez-Barajas airport.

The operation has been advised by the real estate consultancy firm Knight Frank.

The complex includes an office building, with a surface area of more than 9,100 m2, occupied by several tenants: Adquira, the company specialising in e-commerce; Lebara, the telephony company; Ixion, the robotics and drone firm; and Norgine, the pharmaceutical business, amongst others.

The complex also has retail and leisure areas and indoor and outdoor parking.

In addition, the asset houses a four-star hotel, managed by Barceló Group, now under the Occidental Hoteles brand.

The Hotel Occidental Madrid Este – previously known as Barceló Torre Arias – has 108 rooms, four of which are junior suites, as well as a gym, sauna and restaurant. The establishment also has two meeting rooms with capacity for up to 80 people.

With this operation, Marathon is strengthening its presence in the Spanish real estate market. The US fund is, together with Attestor, Bank of America Merrill Lynch, Barclays, Deutsche Bank and JP Morgan, one of the minority shareholders of the property developer Vía Célere, which is controlled by Värde (75%).

Moreover, the investment fund acquired the Bahía Azul shopping centre in Málaga in 2016.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

BlueBay Signs JV With Nadhmi Auchi To Operate Hotel Miguel Angel

18 September 2015 – Cinco Días

The Madrilenian Hotel Miguel Angel is going to be operated by a prestigious player once more, but not one that has a significant international presence. The hotel chain BlueBay will manage the property from now on, after it reached an agreement with the owner, the Iraqui born Briton Nadhmi Auchi, who has been running the hotel since December 2013, when Occidental Hoteles departed, whereby putting an end to its operations in Spain.

All of the international hotel chains have had their eyes on Hotel Miguel Angel, amongst others, since the Four Seasons announced its arrival in Madrid, in the Canalejas complex, and Mandarin announced its acquisition of the Ritz. In the end, the Spanish firm BlueBay, owned by investor Jamal Satli Iglesias, will take over the management of the property, which has 267 rooms, under an agreement that will involve the creation of a joint venture between BlueBay and Nadhmi Auchi. Together, they will invest around €35 million on the refurbishment. The renovation will be completed over the next few months and will involve the creation of new facilities and the expansion of the gastronomic offer, according to the chain, which aims to convert the hotel into “one of the most emblematic luxury, 5-star establishments in the city and in Spain”, said the CEO of BlueBay, Joaquín Janer.

This operation is BlueBay’s first foray into Madrid – traditionally, the company has a strong presences in the holiday hotel market, but not in the city hotel segment – it owns one 3-star hotel in Barcelona and two hotels in Mérida (one 5-star and one 4-star). BlueBay’s portfolio contains 52 properties across 27 locations. It will soon add eight more assets as a result of its international expansion, which will take place in the Middle East, Latin America and Europe. In April, it announced its expansion into Morocco and it plans to start constructing four hotels in Brazil this quarter.

In Spain, BlueBay is also working to open two other properties, in Marbella and Estepona, in 2018, which will require an investment of around €100 million. The chain, founded in 1976, operates six brands, including the urban specialist BlueCity. The brand used to be owned by Marsans, but following that company’s bankruptcy in December 2009, the businessman Jamal Satli Iglesias acquired it from Posibilitum, in an operation that included the management of 11 hotels. Satli Iglesias also holds a stake in Málaga Football Club, through which he has a dispute pending with its chairman, Abdullah Al Thani.

Renovation of Madrid’s luxury hotels

The refurbishment of Miguel Angel will represent a new boost for the 5-star segment in the capital, following the arrival of Four Seasons, which resulted in a “pull effect” in Madrid for other major international operators. During this time, Mandarin joined forces with the Olayan Group to purchase the Ritz. Despite this, the city’s hotel market is still missing companies such as Hyatt, Kempiski, Hilton, W and Shangri-La, although the details of the Wanda group’s plans for its hotel project at Edificio España have not yet been revealed. One of the most tempting properties for investors and operators over the coming months will inevitably be the Villa Magna, whose owner rejected a purchase offer from Jaime Gilinski in August for €190 million, and the (Westin) Palace. The owners of the latter have set a sales price of €330 million for the establishment.

Original story: Cinco Días (by Laura Salces Acebes)

Translation: Carmel Drake

Barceló Will Acquire 100% Of Occidental

17 June 2015 – Cinco Días

Barceló Corporación Empresarial has signed an agreement with BBVA to acquire the remaining 57.5% stake in Occidental Hoteles Management, which would turn the Mallorcan hotel group, the current holder of 42.5% of the hotel chain, into the sole owner of the company.

In a statement, Barceló reported that the operation is subject to the necessary authorisation being granted by the competition authorities in Mexico. It also said that the addition of Occidential to its portfolio represented “a very significant step” in its growth strategy in Latin America.

As soon as this procedure has been completed, which is expected to take around three months, Barceló will acquire 100% of Occidental’s shares and will begin to manage the properties.

On 4 May, Barceló purchased a 42.5% stake in Occidental Hoteles, from the company’s minority shareholders….The option of acquiring 100% of Occidental’s capital was something the Mallorcan hotel group had in mind at the time. (…)

Through the acquisition of Occidental Hoteles, the Mallorcan tourism group would strengthen its position in the Caribbean with new properties in Mexico and the Dominican Republic. It would also gain a foothold in new countries such as Aruba, Colombia and Haití. (…)

Original story: Cinco Días

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

Barceló Acquires 42.5% Stake In Occidental Hoteles

5 May 2015 – Expansión

42.5% shareholding / The tourism group acquires the stakes held by Amancio Ortega, owner of Inditex, and several minority shareholders, and continues to negotiate with BBVA to take control of the chain.

The sale of Occidental Hoteles has been unblocked with Barceló’s purchase of a share of its capital. The tourist group has acquired a 42.5% stake from Amancio Ortega, owner of the textile empire Inditex, and several minority shareholders. In parallel, it is also negotiating with BBVA, which controls the remaining 57.5%, to gain control of 100% of Occidental and strengthen its position in the Caribbean.

Although the exact amount of the transaction is unknown, it has been closed with a discount of between 40% and 50% with respect to the €700 million that BBVA and Ortega paid in 2007. That was the figure that the shareholders hoped to obtain through the divestment process launched in 2013, which was thwarted last December, with Barceló as the favourite, due to differences over price.

Then, Barceló was bidding together with the fund Caribbean Property Group (CPG). Now, the tourism group is going to single-handedly undertake the purchase of the shares held by Ortega (who holds 23.63% through his company Partler 2006), Gregorio de Diego (who controls 13.5% through Tamar International) and the Miarnau family (whose company Iosa Inmuebles holds 5.26%).

Competition

The transaction, which is pending approval by the Mexican competition authorities, will be structured as a financial investment, and so Barceló will not take over the management of Occidental’s hotels. The chain operates 13 properties in the Caribbean and owns the majority of those establishments.

Nevertheless, sources in the sector are convinced that BBVA will end up selling a non-strategic stake. In fact, that is the joint position that the entity chaired by Francisco González and Amancio Ortega held until the end of 2014. The only thing that has separated them has been the timing (of their respective exits).

The textile businessman wanted to accelerate his exit from Occidental before the company looses value, since there is no growth plan on the table. In contrast, BBVA was keen to wait for a better offer and set a limit below which it was not willing to divest. In the end, the partners have broken their shareholders’ agreement, which has opened the door to Occidental for Barceló.

In terms of convincing BBVA, the close ties that unite the companies work in the tourism group’s favour. Barceló, BBVA and FCC created an asset company Grubarges in 1998, with the aim of channelling its surplus investors and growing in the hotel sector. Grubarges was dissolved in 2004 due to strategic differences between the partners, but the relationship is still strong.

If Barceló acquires 100% of Occidental, it will strengthen its position in the Caribbean, one of the priorities on its roadmap to become the world leader in the holiday hotel sector. Through the integration, Barceló would obtain a presence in new countries – Colombia, Aruba and Haití – and would strengthen its position in the Dominican Republic, Mexico and Costa Rica. Furthermore, the transaction would involve an investment plan to reposition Occidental’s properties.

Barceló currently operates 94 hotels and 30,000 rooms in 16 countries. In 2014, the company generated profits of €46.4 million, up 85.6% and turnover of €2,056.6 million, up 6.2%.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

BBVA & Ortega Will Need To Reach An Agreement To Sell Occidental Hoteles

9 March 2015 – Expansión

BBVA is the primary shareholder in Occidental. Through a number of investment companies, the bank controls 57.53% of the chain.

Amancio Ortega, the owner of Inditex, holds a 23.62% stake through his investment company Partler 2006. The other shareholders together control less than 20%.

The shareholders of Occidental Hoteles return to the market in search of a buyer, after the transaction with Barceló failed in December. Disagreements over price will be key to the divestment. (…). The investor duo, which together own more than 81% of the company, are again looking for a replacement. (…).

Plan

In 2007, the partners acquired Occidental from Mercapital and La Caixa for €700 million, including a debt of €229.5 million. The owners planned to invest €340 million to grow the chain and convert it into a world leader in the leisure segment, but that was suspended due to the economic crisis.

Over time, Occidental became a non-strategic investment and after restructuring the business and refinancing its debt in 2013, BBVA and Ortega launched a process to sell their stakes at the beginning of last year. (…)

According to sector sources, BBVA and Ortega were trying to sell at a price in line with what they paid eight years ago, however the offers they received included discounts of between 40% and 50%, given the investment required in Occidental’s hotels. At the last minute, an agreement with Barceló and CPG fell through; according to terms of the alliance between the two parties, the fund was going to assume the financial outlay and Barceló was going to take over the management of the hotels.

Given the situation, the shareholders of Occidental decided to suspend the process, although they are now resuming their search for candidates. And that is where the discrepancies arise over how to execute the divestment.

Ortega, who put an end to his adventure with the NH Hotel Group a year ago, is keen to accelerate his exit from Occidental, whose value may well decrease over the medium term, since there is no plan in place to allow it to keep growing. Meanwhile, BBVA is more reluctant and has put a (price) limit below which it is not willing to divest. Both investors have signed an agreement, which means that they will study any offers they receive.

The problem is that sooner or later, they will have to reach a consensus, since an agreement exists between the shareholders that links the approval of agreements in meetings to a favourable vote of at least 51% of the voting rights of Occidental.

Moreover, on an exceptional basis, for matters such as the appointment of the chairman, a minimum quorum of 66% is required. (…)

The hotel chain has now started to modernise its portfolio, which includes 13 hotels, most of which it owns. In recent years, Occidental has significantly reduced its portfolio – when BBVA and Ortega acquired their stakes, the group had 80 hotels and 18,500 rooms.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake