JLL: Hotel Inv’t Reaches Almost €5,000M In 2 Years

11 January 2017 – El Independiente

The tourist boom (which saw record numbers of tourist arrivals and a recovery in demand from Spanish clients) was followed by a boom in the hotel sector (with record occupancy rates and tariffs); and both have been supported by a boom in investment in hotel properties. With tourist activity at record highs and no signs of a slow down in sight, the purchase of hotel buildings has become a cushy deal for investors.

In two years, real estate investment in hotels in Spain has amounted to almost €5,000 million. Following a historical record in 2015, when operations were closed amounting to €2,650 million, last year, transactions were signed amounting to €2,155 million, the second best year ever, according to the latest report compiled by the consultancy firm JLL Hotels & Hospitality Group.

Several major operations have sustained the pace of investment. Just before the end of 2016, Merlin Properties sold off its hotel portfolio, transferring it to the fund Froncière des Règions for €535 million. The sale of the hotel Villa Magna de Madrid by Sodim SGPS to Dogus Group for €180 million represented a new national record in the price paid per room (€1.2 million per room, compared to €800,000 per room in the case of the Ritz in 2015, which had held the record since then).

Other large transactions included the sale by AXA Investment Managers of the Pullman Barcelona Skipper Hotel to Shaftesbury for €93 million; and the purchase of the historical headquarters of Caja Madrid by KKH Capital Group and Perella Weinberg RE for €80 million, which it will convert into a luxury hotel.

In total, investors purchased 130 hotel assets in Spain last year, in addition to the 143 hotels that they bought during the record year of 2015. Madrid led the ranking as the main location for investment, accounting for 28% of the total volume with €597 million. It was followed by Barcelona with €344 million (16%), despite the hotel moratorium declared by Ada Colau’s Town Hall, and Las Palmas (7.4%), Fuerteventura (7.4%), Málaga (7.4%), Valencia (7%) and Mallorca (6.1%).

Investments funds take over from the Socimis

During 2015, the major stars of the hotel investment segment by far were the Socimis (…), which accounted for almost €1,000 million of transactions during that year. But they have been replaced by investment funds, which have become the major players in the hotel investment market, accounting for 51.5% of total volumes.

The investment funds that have accounted for most of the transaction volume have been: Foncière des Régions, with 19 hotels and a total investment volume of €535 million; HI Partners, which has purchased eight assets for €200 million; KKH Capital Partners, which together with Perella Weinberg RE, bought the Celenque building for €80 million; and Internos Global Investors, which purchased Hotel Innside Madrid Suecia for €45 million.

According to JLL’s forecasts for 2017, the hotel investment market will continue to be active and investment volumes will remain similar to those seen in 2016, thanks to interest from international investors. The consultancy firm thinks that the requirement for owners to continuing to reduce the debt on their balance sheets, the strengthening of the strategy by national hotel chains to sell off properties and continue to operationally manage establishments, and the strong outlook for the tourist sector in general place the Spanish hotel market in the investor spotlight.

Original story: El Independiente (by David Page)

Translation: Carmel Drake

BBVA’s Turkish Partner Buys Hotel Villa Magna For €180M

6 March 2016 – Expansión

Another transaction has been closed in the five-star hotel sector in Madrid. Following the sales of the InterContinental and the Ritz, now Hotel Villa Magna is changing hands. Sodim, the Holding company owned by the Portuguese family Queiroz Pereira, has sold the hotel to the Turkish group Dogus, who will pay €180 million.

Sodim, which has been advised by JLL, has completed the operation that it launched at the beginning of 2015 and which it almost closed half way through last year with the Colombian investor Jaime Gilinksi as the buyer. In the end, the deal with Sabadell’s largest shareholder was suspended because of financing problems, which forced Sodim to make contact with other interested investors and delay the transaction close.

Price

The price agreed by Dogus is slightly lower than the amount agreed with Gilinski – €190 million – but it represents the minimum amount that Sodim set when it launched the process. The Portuguese Holding company paid the Japanese firm Shirayama €80 million for the property in 2001. Years later, Sodim closed the hotel, which is located on the Paseo de la Castellana, to modernise the facilities, involving expenditure of around €50 million. The construction work did not alter the building’s distinctive pink granite façade, but it did reduce the number of rooms down from 182 to 150, as well as increase the number of suites from 18 to 50. In 2009, when the hotel was reopened, Sodim decided to take over the management of the hotel, as it had already done with the Ritz in Lisbon, and it dispensed with Hyatt, which had operated the property for almost two decades.

Brand

Despite the change of ownership, the operating structure may be maintained, given that, according to market sources, the intention of Dogus is to operate the hotel by itself, without involving any international brands, which would somewhat ruin the intentions of Marriott and Starwood, who were negotiating with Gilinksi to take over the management of the hotel.

Dogus is a giant that comprises more than 250 companies and employs 50,000 people. It is BBVA’s partner in Garanti bank. The group, controlled by the Sahenk family, sold a 15% stake in Garanti to the bank led by Francisco González in July 2015 for €1,854 million, which increased BBVA’s shareholding to 39.9% and turned it into Garanti’s largest shareholder.

Founded in 1951, Dogus has interests in the financial, automobile, energy, real estate and tourism sectors, amongst others. The group, which is listed on the Istanbul stock exchange, imports and distributes vehicles from brands such as Volkswagen, Seat and Audi, amongst others. Around 74% of its revenues are generated by the automobile sector.

In 2014, Dogus recorded revenues of €3,231 million. Its tourism division comprises a travel agency and eight luxury hotels – five of which it owns. Some, such as the Park Hyatt and the Grand Hyatt in Instanbul are managed by an international brand. (…).

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake

JLL: Hotel Investment Exceeded €2,650M In 2015

12 January 2016 – Expansión

2015 was a record year for investment in the hotel sector, driven primarily by Spanish buyers. The Canary Islands and Madrid were the stars in terms of location. Last year, 143 hotels were sold in Spain worth €2,650 million, which represents an increase of 65.6% compared with 2006, the previous record-breaking year; and more than double the investment volume recorded in 2014 – €1,180 million.

Spain was the third most popular European country for investors, behind the UK and Germany, according to a report by the consultancy firm JLL Hotels & Hospitality Group. And Spanish investors returned to the spotlight, thanks to the improvement in the domestic economy. In 2015, 74% of total investment was made by domestic buyers, compared with 58% a year earlier.

In this regard, the Socimis were the great discovery of the year. Merlin and Hispania, the two largest Socimis by market capitalisation, spent €965 million on hotels, whereby accounting for 36.4% of the total volume invested in Spain.

In terms of Spanish investors, the Socimis and investment funds were followed by Spain’s hotel chains, which accounted for 13.5% of total investment. The Catalan hotel chains H10 and Hotusa were the most active in 2015. They were followed by private investors, such as family offices, which accounted for 8.9%.

In the meantime, overseas investors accounted for 26% of total investment in Spain, with buyers from France being the most active – Accor’s acquisition of four Novotel hotels was a key deal – behind those from Germany – IFA paid €48 million for two properties in the Canary Islands – and Hong Kong – Mandarin purchased the Ritz in Madrid, together with the Saudi group Olayan-.

By type of investor, the funds increased their weight significantly during the year, specifically, up from 30.4% to 53.6% of the total. Hotel groups and private investors lost steam, in contrast to the real estate companies, which recorded a slight rise.

The Canary Islands accounted for 29.6% of total investment, benefiting from the upturn that Spain’s tourism industry is experiencing at the moment due to (political) instability in other competing countries in the Mediterranean. 31 hotels were sold there in total, primarily as a result of the partnership between Meliá and Starwood Capital, as well as due to the creation of Bay, the first pure hotel Socimi, by Barceló and Hispania.

Recovery

Madrid was the second most popular destination, accounting for 23.5% of total investment. The price paid for the Ritz hotel – €778,000 per room – was the highest recorded in Spain. Half of the operations involved five-star hotels and 43% involved four-star hotels.

Occupancy rates have improved in the Spanish capital, but the average price there continues to fall below its pre-crisis levels.

In the Balearic Islands, hotels worth more than €445 million were sold – 16.8% of the total – , above Barcelona, where 14 transactions worth €340 million were signed – accounting for 14% – above all, involving four-star properties. Despite the moratorium imposed by the mayoress Ada Colau, the Catalan city is the country’s leader in terms of profitability and the outlook there is positive.

Another trend in 2015 was the sale of hotel portfolios. 78 of the 143 hotels that changed hands belonged to a larger batch. This year, more operations of this type are expected, albeit smaller in value; and overseas Socimis and investors are expected to play a more active role. According to JLL, investment in 2016 could reach similar levels to those seen last year.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Hilton To Open Hotel In Centre Of Madrid

11 November 2015 – Expansión

The US giant is set to debut its Double Tree brand in the heart of the capital, with a 61-room hotel on Calle San Agustín, which the Pérez Gil family will manage under a franchise agreement.

Hilton is joining the hotel battle in the centre of Madrid. The US group will debut its Double Tree brand in Madrid in 2016, with a hotel in the tourist centre of the capital.

Specifically, it will open a hotel in a building that currently houses offices on Calle San Agustín, Madrid. This building is owned by the Pérez Gil family, which also owns several other hotels in Madrid. The owner will take responsibility for the renovation of the building and will manage the four-star hotel under a franchise agreement.

Hilton, whose only presence in the capital until now has been near the airport, is moving into the centre to compete against Four Seasons and Mandarín, which are preparing to open hotels of their own in the Canalejas complex and in the Ritz, respectively. The US chain also participated in the bid to manage the Hotel Miguel Angel, but in the end that contract was awarded to Bluebay.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Hotel Villa Magna On The Market For €180M

2 June 2015 – Expansión

Madrid/ Sodim, the holding company owned by the Portuguese family Queiroz Pereira, is looking for a buyer for the five star hotel it acquired for €80 million in 2001.

Following the sales of the InterContinental and Ritz hotels to the Qatari sovereign fund and the alliance formed by Mandarin and the Saudi firm Olayan, respectively, it is the turn of Villa Magna. Sodim, the holding company owned by the Portuguese family Queiroz Pereira, has put the hotel, which it purchased from the Japanese company Shirayama in 2001 for €80 million, up for sale.

Sodim is asking €180 million for the five star property, located on Paseo de la Castellana. If it achieves its goal, it will become the largest operation to be signed in Madrid, ahead of the Ritz – €130 million – and the InterContinental – €70 million – but behind the €200 million paid by the Qatari Diar fund for Hotel Vela in Barcelona in 2013.

The operation, which is in its initial phases, may attract interest from foreign investors and international hotel groups wanting to improve their location or enter Madrid’s market, such as Hyatt, Hilton, Shangri-La, Kempinski and Jumeirah, amongst others.

Hyatt managed the Hotel Villa Magna for almost two decades until 2009, when following the complete renovation of the hotel, the owners decided to take over the management themselves. Sodim also owns the Hotel Ritz in Lisbon, which is operated by Four Seasons, which is itself finalising its entry into the Spanish market, at the Canalejas complex in Madrid, together with Juan Miguel Villar Mir.

Hyatt no longer has a presence in Spain after it exited the Villa Magna and La Manga (Murcia). Its name has also appeared on the list of candidates to take over the management of the Hotel Miguel Angel, whose future is still not clear. Its owner, the British investor of Iraqi origin Nadhmi Auchi, is operating the property following Occidental’s exit last year.

(…)

The Hotel Villa Magna underwent a major refurbishment several years ago. It closed its doors on 1 August 2007 and reopened again at the beginning of 2009…€50 million was invested in total…the result was a hotel with fewer, but more luxurious rooms. The property retained its distinctive pink granite façade and the number of rooms decreased from 182 to 150. In exchange, the number of suites increased from 18 to 50. It also expanded its gastronomic and leisure offer, with new restaurants and a spa. Since 2009, it has offered rooms measuring between 30m2 and 290m2 – the Royal Suite.

The average room rate at the Villa Magna starts from €310 per night for a standard room. The Royal Suite costs €16,000 per night.

(….) The luxury hotel sector has been hit by the crisis, although the Villa Magna has not suffered as much as some. In 2013, it generated turnover of €19.29 million, up 4.8%…and the net profit was €3.68 million, compared with losses of €14.89 million in the previous year.

Nevertheless, the hotel closed 2013 with negative equity of €33.8 million, due to financial charges and impairment losses. Its financial debt exceeded €70 million. Even though it has the backing of Sodim through equity loans, the auditor PwC warned of significant uncertainty in terms of the hotel’s capacity to continue as a going concern.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Mandarin Oriental Enters The Bidding War To Buy The Ritz

12 February 2015 – Cinco Días

A new chapter has begun in the bidding war to buy the Ritz in Madrid, one of the most emblematic hotels in the capital. The property has been on the market for almost two years, but may have a new owner in a matter of days. Mandarin Oriental, one of the largest Asian luxury hotel chains, has set its sights on the hotel, which is currently controlled by Orient-Express and Omega Capital, the investment company owned by Alicia Koplowitz.

The owners of the Ritz have been looking for a buyer for the property for almost two years, which, despite its prime location and the power of its brand, has lost much of its appeal in recent years, due to a lack of investment. This has meant that all of the operators that have shown an interest in acquiring the property have identified the need to undertake a major refurbishment, which has played against a quick sale.

Despite that, Orient-Express, now known as Belmond, and Omega have remained steadfast in their price expectations, which led Marriott to placing an offer for €130 million on the table; the transaction fell through at the last minute, when it seemed like every blessing had been given. The problem was that, by adding the purchase cost to the amount required to reform the property, the buyer considered that the final result was infeasible.

Fairmont took over the reins in the bidding process during the second half of last year, by offering €120 million for the property, whose refurbishment it valued at around €60 million. The luxury hotel chain analysed all kinds of options to try to close the transaction successfully, ranging from reselling the rights of the Ritz brand to Marriott – which would have allowed its rival to use the brand throughout the Iberian Peninsular – to addressing the possibility of operating the asset under its second brand, Raffles.

But, according to several market sources close to the negotiations, Fairmont has now also withdrawn from the bidding, leaving the way open for Mandarin. The Asian player may end up closing this complex transaction, mediated by JLL, through an agreement whereby it takes on a management role, but which, in any case, will allow the Asian chain to establish itself in Madrid, a market that it has been analysing with much interest for over a year.

After acquiring numbers 38 and 40 on the exclusive Paseo de Gracia in Barcelona, overlooking Casa Batlló, the Hong Kong firm opened its first property in Spain at the end of 2009. With this investment now well established, the Asian hotel chain has plans to grow in the country, both in Barcelona and, above all, in Madrid.

Luxury hotels arrive in Madrid

The emergence of Four Seasons in the capital, which has reached an agreement with OHL Desarrollos to open the luxury Canalejas complex, has been a catalyst for the Madrilenian hotel market. The large international chains have set their sights on the city and deals are expected to be signed for properties such as the Hotel Villa Magna, the Hotel Miguel Ángel and the old headquarters of Asturiana de Minas; without forgetting the Edificio España, which was acquired by the Chinese Group Dalian Wanda.

These deals will follow others agreed in the last few months, such as the opening of Barceló’s four star hotel in the Torre de Madrid, the conversion of the Hotel Asturias into a boutique hotel and the transformation of the historical Tio Pepe building into a 5 star hotel.

Omega Capital and Belmond acquired the Ritz twelve years ago for €125 million. The strong impact of the economic crisis on the hotel sector in the capital, with declining tourist numbers and low prices, in addition to the cost of the pending renovation of the emblematic hotel, has taken its toll on the brand, for which an impairment loss of €12 million was recorded in 2013, the last full period for which official results are available.

Original story: Cinco Días (by R. Ugalde)

Translation: Carmel Drake

Hotel Villa Magna In Madrid Up For Sale

16 January 2015 – idealista news

The Spanish hotel sector is on the radar of investors. The combined effects of the growth in tourism, falling price of oil and weakness of the euro bodes well for the performance of the sector; and sellers do not want to miss out on the opportunity. In the luxury segment, not only are the Ritz and Miguel Angel Hotels in Madrid up for sale, so too is the Villa Magna. Its owner, the Portuguese businessman Pedro Queiroz Pereira has expressed interest in selling the property, although the bids received so far have fallen below expectations.

Although no official sales mandate has been issued yet, the Portuguese firm Queiroz Pereira is open to offers for the purchase of Villa Magna, located in the Salamanca neighbourhood of Madrid. According to market sources, the selling price is close to €130 million, a price that no investor has been willing to pay so far.

Financial sources say that the price is inflated and that the hotel is not worth more than €90 million. Idealista.news contacted the owner of the property who declined to comment.

The Portuguese holding company, which also owns the Ritz Hotel in Lisbon, purchased the Villa Magna in 2001 from a Japanese family, the Shirayamas. Six years later, in 2007, it decided to undertake a “facelift” of the hotel, which was closed for 14 months whilst renovation work was completed. Sodim, a subsidiary of the Queiroz Pereira Group (and owner of Semapa, the main industrial group in Portugal) invested around €150 million on the hotel acquisition and remodelling work.

(……)

Hotel Villa Magna currently has 150 rooms of between 30m2 and 290m2, as well as various conference rooms, meeting rooms and a garden for outdoor receptions and dinners. It also has a wellness club with a sauna and Turkish bath.

Hotels, an investor target

In 2014, investment in hotels amounted to €1,081 million, up 37% on the previous year, to reach levels similar to those recorded before the crisis. The following transactions were amongst those that took place in the 5 star segment: the Hotel Renaissance in Barcelona was sold by Marriott International to the Qatar Armed Forces for €78 million; the Hotel Intercontinental in Madrid was sold to the Katara Hospitality Fund for around €60 million; and the Hotel Meliá La Quinta in Marbella was also sold.

Last year was also significant because more transactions were recorded in the holiday hotel sector than in the urban sector. Transactions included the acquisition of the Guadalmina Hotel in Marbella (4 star) and the Meliá Jardines hotel in Teide, Tenerife (also 4 star) by Socimi Hispania.

The arrival of the Four Seasons chain, a boost for the sector

The arrival in Spain of the luxury hotel chain Four Seasons has increased the level of interest in the renovation of historic properties, such as the Miguel Angel and Ritz Hotels in Madrid, which are currently up for sale. This foreign chain expects to open its first property in the Plaza de Canalejas, Madrid in 2017. It will be the first Four Seasons hotel in Spain.

Original story: idealista.com (by @pmartinez-almeida and tânia ferreira)

Translation: Carmel Drake

Recession Hands Over a Bill to Hotel Ritz

12/11/2014 – Cinco Dias

The economic crisis and the decline in the number of visitors coming to Madrid over the past years have deeply undercut the value of one of the most iconic hotels in the capital city. El Ritz by Belmond is 50% owned by Omega Capital, an investment vehicle of businesswoman Alicia Koplowitz, and chain Belmond, until recently known as Orient-Express Hotels. In the last three years, the brand value dipped from €22.9 million down to €10.9 million.

Auditor’s report on the Hotel Ritz Madrid company 2013 balance by PwC reveals that the 2011 and 2012 reporting included a caveat that incomplete data was accessible to verify correctly the brand’s value, ‘albeit the 2014 study provided us with an independently conducted valuation (…) indicating a €9.84 million loss’.

Hotel Ritz Madrid, directly operating the Hotel Ritz, registered a net revenue of €1.98 million in 2013, compared to the €3.3 million loss from a year earlier. The proceeds were intended for reducing the red from the previous years, showing a hole €46.15 million deep as per December 31st 2013.

PwC assures that the firm neither inclines towards dissolution nor ‘mandatory capital reduction’, in spite of negative working capital posting €62.16 million at the end of 2013, not considering the payables with its shareholders, and a negative net equity of €3.5 million. However, the auditor warned about ‘uncertainty about further operating capacity of the company’. From January to April 2014, Hotel Ritz Madrid met the financial liability agreed upon with the creditor banks and its two stakeholders injected €6.9 million in cash, loans of a participative nature at a 3.05% annual interest rate. In 2013, another €7.5 million was put in, and in 2012 €6.2 million more. Omega Capital and Belmond hold loans and credits amounting to €38.4 million.

At the end of 2013, the company owed €61.8 million to the banks and the Hotel Ritz was a collateral at the giant NPL portfolio ‘Octopus’ sale by Hypothtekenbank Frankfurt AG earlier this year. Throughout 2012, the establishment was thoroughly refurbished with view to ‘improving revenues in the next years’.

Omega Capital and Belmond bought the Ritz in 2003 for €125 million. Currently up for sale, the establishment called attention of such big-name brands as Marriot and Fairmont.

 

Original article: Cinco Días (by L. Salces)

Translation: AURA REE

Alicia Koplowitz & Orient-Express Seek Buyer For Hotel Ritz in Madrid

6/05/2014 – Expansion

The Hotel Ritz in Madrid returns to the market after a decade. Omega Capital, an investment firm chaired by Alicia Koplowitz, together with Orient-Express that is managing the establishment hired JLL (former Jones Lang LaSalle) to say goodbye to the property they acquired for €125 million from Le Méridien in 2003.

There are several solutions in talks: the hotel could be sold to a third party but managed by Orient-Express, or the luxury chain could waive operating the Ritz completely. The latter scenario would multiply the number of aspirants wanting to acquire the property. There is also a possibility that a fund would finance refurbishment of the building through more expensive mezzanine debt.

Noteworthy candidates that have already presented their proposal are, among others: Marriott, Hyatt, Hilton, InterContinental or Mandarin Oriental, all looking for an excellent location in Madrid´s center.

Moreover, sources with knowledge of the market suggest that perhaps Orient-Express could buy Omega´s stake in the hotel or vice versa.

The Four Seasons´s plans to open a hotel in the Canalejas complex in the capital in 2017 attracted attention of other world-wide known hotel giants.

When it comes to the hotel itself, at the end of 2012 its books showed a 6% cut in revenues (down to €23 million) and loss reduction by 76% to €3.3 million. That time the property had a mortgage to assure payment of €65 million in loans from Hypothekenbank. In 2013, its owners contributed with €6.38 million that jointly rise the shareholders´credit to €38 million.

The property yet does not dispose of all the town planning permissions from the City Council of Madrid. Investment in its renovation would consume between €40 and €50 million. After the remodelation, it will offer less rooms but more suites (currently it has got 137 of the first and 30 of the second type).

 

 

Original article: Expansión (by Yovanna Blanco)

Translation: AURA REE