Mexican Millionaire Sanginés-Krause Acquires Hotel Villa Magna in Madrid for €210M

20 November 2018 – El Confidencial

The finishing touches still need to be agreed but the parties have already shaken hands. The Mexican millionaire Allen Sanginés-Krause has just surprised the Spanish hotel sector by signing the purchase of the luxury hotel Villa Magna for a whopping €210 million, according to confirmation from sources familiar with the transaction. In reality, the vehicle that is finalising the acquisition is the Mexican Socimi specialising in Caribbean resorts, RLH Properties, of which the banker is President and a major shareholder.

Hotel Villa Magna was put up for sale in hurry just a few months ago, after its current owners, the Turkish emporium owned by the Sahenk family, was forced to divest several of its real estate assets around the world to complete the refinancing of its holding company, which was affected by the collapse of the Turkish lira. The process, which has been entrusted to JLL, has progressed in the fast lane, with several other Latin American magnates invited to bid.

Although the final completion of the deal is pending several details, the price exceeds all expectations. RLH Properties is going to acquire Villa Magna at a ratio of €1.4 million per room (the hotel has 150), a figure never achieved before in the Spanish market, according to hotel experts. The profitability of an investment such as this is beyond the magnitude that the real estate funds manage, taking into account that there are five-star hotels available in Madrid from €300 per room.

The buyer has thrown the chequebook to acquire this trophy property. Besides money, it has experience as a manager of hotel assets for luxury brands such as Four Seasons, Rosewood and Fairmont. In fact, it completed one of its closest acquisitions with OHL, from which it purchased its Mayakoba Caribbean complex (a resort with a golf course in the Riviera Maya) in two phases (between 2016-2018), for which it paid €470 million in total.

Sanginés-Krause’s relationship with the Spanish world transcends the sphere of business. His name was in the news a few months ago after it was revealed that he had hosted King Juan Carlos at his castle in Ireland. That private visit came to the attention of the press and it was discovered that the monarch was accompanied during his stay by his Mallorcan friend Marta Gayá. The meeting shows the degree of confidence that the emeritus has with the Mexican banker (former of Goldman Sachs and now head of BK Partners).

If this investment goes ahead, the list of Mexican companies taking roots in Spain will continue to grow. The second-to-last major operation saw the acquisition of Grupo VIPS by the restaurant holding company Alsea, which paid almost €500 million to acquire the company founded by Plácido Arango and his family. And based on the rate of purchases, it will not be the last big deal to star money proceeding from Mexico.

Original story: El Confidencial (by Carlos Hernanz)

Translation: Carmel Drake

Meliá Sells 3 Hotels to Socimi Atom for €73.4M

13 July 2018 – Expansión

Meliá Hotels has announced an agreement with the Socimi Atom Hoteles, in which Bankinter holds a stake, for the sale of three hotels in Sevilla, Santa Cruz de Tenerife and Fuerteventura for €73.4 million.

The transaction, which will generate a net accounting profit of €6.6 million, includes the hotels Meliá Sevilla, Sol La Palma (Santa Cruz de Tenerife) and Sol Jandía Mar (Fuerteventura), respectively.

The establishments will continue to be operated by Meliá by means of variable rental contracts (25% of the total revenues) for periods of 5 years, with a maximum of 4 extensions at the discretion of Meliá and up to a maximum of 25 years.

The operation values each room at €66,000 and represents an EBITDA (result before depreciation and amortisation) multiple of 13.9 times.

As part of the agreement, Atom undertakes to invest €20.2 million in the three hotels, whereby allowing their “repositioning”. Thus, the price per room after the investment will amount to €83,000.

The hotel chain has said that this sale forms part of its “strategy to adapt the attributes of the brands of all of the establishments operated by the company”.

Original story: Expansión (by D. B.)

Translation: Carmel Drake

Irea: Madrid Led Ranking For Hotel Investment In 2016 (€445M)

2 October 2017 – El Boletin

The strong outlook for tourism in Madrid is continuing to attract interest from investors, as shown by the fact that the Spanish capital was the largest focus for hotel investment in 2016, with a total volume of €445.3 million, according to the report “Five Keys Madrid vs Barcelona 2016 – 2017”, published by Irea.

Last year, Madrid recorded 13 transactions in total, the most notable of which involved the sale of Hotel Villa Magna to the Dogus Group. During the first half of 2017, the city of Madrid registered 6 hotel transactions, whereby doubling the number recorded in 2016, with a total volume of €312.9 million. By far the most significant operation in H1 2017 was the purchase of Edificio España by Riu Hotels, which is going to convert the property into a 650-room hotel in the heart of Madrid.

Meanwhile, Barcelona was relegated to third place in the hotel investment ranking in 2016, behind Madrid and the Canary Islands, but ahead of the Balearic Islands, with a hotel investment volume of €214.6 million. Six hotels were sold in the Catalan capital, containing 1,028 rooms in total.

Nevertheless, that investment figure represented a decrease of 38.8% with respect to the maximum reached in 2015, explained in large part by the price rise effect resulting from the hotel moratorium approved by the city’s Town Hall. The first half of 2017 was very active in terms of hotel transactions, with the sale of five hotels and a total investment of €230.2 million. The main transactions involved the purchase of 55% of Hilton Diagonal by AXA REIM (for a price per room of more than €300,000) and the acquisition of Silken Diagonal by Benson Elliot and Highgate.

Demand

Madrid also led the domestic ranking for the number of travellers last year and came second (after Barcelona) in terms of the number of overnight stays, with 9.0 million and 18.1 million, respectively. For another year, the Catalan capital was the leading destination in terms of overnight stays in 2016 (19.6 million); it received 7.5 million travellers, which represents an average stay of 2.6 days (vs. 2 days in Madrid).

The report highlights that in both markets, the behaviour of international demand has been excellent and it notes the growth of 10.2% in the case of Madrid during the first half of 2017, confirming the upwards trend driven by overseas tourists (…).

Supply

In terms of the hotel supply, Madrid recorded a total of 68,790 beds in the highest category (an almost identical figure to that of Barcelona) (…), with 5-star establishments accounting for 15% of the city’s hotel beds in 2016.

Although the statistical data do not reflect it yet, the recovery in the construction of new hotels in the capital is already evident – according to the report – and will be noted in the data for the coming years, given that short-medium term forecasts for Madrid indicate that more than 4,400 new hotel beds are going to available soon, led by major hotel chains and international investment funds, who are backing the city, given the strong outlook for its tourism sector (…).

Key indicators

The positive trend that Madrid has recorded in terms of demand, together with the stable evolution of its hotel supply, has led to the growth of operating results in recent years. The Spanish capital recorded an average RevPAR of €63.30 in 2016, up by 6.1% compared to 2015 and up by 32% compared to the minimum level recorded in 2013 (…).

Meanwhile, the profitability indicators for the hotel sector in Barcelona have also grown significantly in recent years. Revenue per available room experienced average annual growth of 2.3% during the period 2008-2016 (…). In 2016, RevPAR in Barcelona amounted to €95.90 (…) up by 5.2% compared to 2015.

Original story: El Boletin (by E. B.)

Translation: Carmel Drake

INE: Foreigners Account For 82% Of Overnight Stays In 5-Star Hotels

29 August 2017 – El Economista

Foreigners who visited Spain in July registered more than 1.9 million overnight stays in five-star hotels, representing 82% of the total number of nights sold in the most luxurious category of hotel accommodation.

According to data extracted by Servimedia from the Tourist Hotel Environment Survey from the National Institute of Statistics (INE), five-star hotels recorded the highest percentage of clients from overseas, exceeding the average for hotel accommodation as a whole, where foreign clients accounted for 67.2% of all rooms, by 15 percentage points.

In fact, 6.5% of the overnight stays by foreigners in Spanish hotels were registered in five-star hotels, a percentage that more than doubles the 2.8% recorded by domestic clients in high-end establishments.

Meanwhile, four-star hotels registered more activity in Spain by both overseas and domestic tourists. The presence of foreign clients amounted to 69.3%, with 14.6 million overnight stays, compared to 6.4 million overnight stays by domestic visitors.

This figure of overnight stays in four-star hotels accounted for 49.7% of all stays registered by overseas tourists in the country, compared to a percentage of 45.2% in the case of domestic tourists.

If we add together the overnight stays registered in the two highest categories, we see that 56.3% of the foreigners that visited Spain in July slept in four and five-star hotels, whilst in the case of Spaniards, that percentage amounted to 48.1%.

After four star hotels, the accommodation most used by foreigners and by local tourists alike were three-star hotels, which hosted 33.2% of overseas tourists and 28.8% of domestic visitors.

Specifically, international tourists registered 9.7 million overnight stays in three-star hotels in July, accounting for 70.2% of the total in that category, compared to 4.1 million domestic overnight stays.

In the remaining categories, 1.4 million overnight stays or 4.7% of the total number of stays by foreigners were in two-star hotels; 0.4 million or 1.5% were in 1-star hotels; 0.5 million or 1.9% were in three- and two-star hostels; and 0.6 million or 2.1% in one-star hostels.

Of these four categories, domestic clients accounted for a higher percentage of total stays than foreigners in the lowest three, whilst overseas tourists accounted for 52.2% of overnight stays in two-star hotels. Specifically, domestic clients accounted for 54.3% of stays in one-star hotels, 58% in three- and two-star hostels and 50.7% in one-star hostels.

Original story: El Economista

Translation: Carmel Drake

Benson Elliot Buys Hotel Silken In Barcelona For €80M

7 October 2016 – Expansión

A major operation and better gains for Bank of America Merril Lynch in Barcelona. The US entity is finalising the sale of Hotel Silken Diagonal for €80 million to a group of investors led by the British fund Benson Elliot. Bank of America will generate capital gains of €50 million from the property in just one year, given that it took over the hotel in 2015 when it foreclosed the debt relating to the property, amounting to €27 million.

According to sources close to the operation, the sale has not been signed yet, although the vendor has entered into an exclusivity period with the purchaser group.

Bank of America Merril Lynch ended up with the mortgage loan following the crisis of the Urvasco group, the parent company of the Silken hotel chain, after it filed for bankruptcy.

The property has 240 rooms and a four-star rating. It is located in the 22@ district of Barcelona, next to the Torre Agbar, and it has a management contract with Silken. The operation has been advised by JLL, which declined to comment on the operation yesterday.

The amount (€80 million) that Benson Elliot has paid together with another investor group, whose name has not been revealed, has been described as exorbitant by several sources in the real estate sector, who point out that the building is located away from the city centre in Barcelona, in an area that suffered a lot at the beginning of the crisis.

Nevertheless, the same sources also indicate that the hotel moratorium applied in Barcelona last year by the mayoress Ada Colau, together with the strong investor appetite for assets in the Catalan capital and the shortage of buildings on the market, have driven up the price of the few properties that have come onto the market. Bank of America put this asset on the market a few months ago and several international investors submitted bids for it.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

Irea: Hotel Inv’t May Reach €2,000M This Year

20 June 2016 – Expansión

Hotel investment in Spain may reach €2,000 million this year, according to estimates made in a study compiled by the real estate consultancy Irea.

Between January and May this year, based on provisional data, investment in the purchase of hotel assets in Spain amounted to €611 million, down by 14% compared to the same period in 2015.

Nevertheless, this investment level is very significant for the real estate consultancy, in comparison with the trend seen during the first five months of the year over the last ten years.

In terms of the volume of hotel assets sold, the figure is very similar to the same period in 2015. During the five months to 31 May 2016, 39 hotels have been bought and sold (compared with 42 last year), nevertheless the number of rooms transacted has decreased by 42.2% from 8,673 to 4,993 so far in 2016.

Increase in the average price paid per room

According to Irea, this implies a considerable increase in the average price per room from €81,000 during the period from January to May 2015 to €122,000 during the same period this year.

For the consultancy firm, this increase is primarily explained by the sale of Villamagna in Madrid (in Q1 2016), at a price of €1.2 million per room, which represents the highest price ever paid per hotel room in Spain.

In addition, the study shows that no hotel portfolios have been sold so far during the five months to May, compared with four that had been sold during the same period in 2015.

It is worth noting the Socimis’ commitment to the hotel sector in the short and medium term, a formula that is currently accounting for all of the operations associated with repositioning assets and adapting them to suit the premium segment.

Experts in the hotel sector agree that the level of growth in this industry may continue in Spain if the hotel supply is renewed and updated in line with the expectations of international tourists, in addition to the investment in technology and the search for customer loyalty.

Original story: Expansión

Translation: Carmel Drake

Nyesa Puts Hotel Tryp Macarena Up For Sale For c. €50M

7 April 2016 – Expansión

The hotel real estate market in Sevilla is on a roll. In addition to several new projects, such as Hotusa’s plans for CaixaBank’s Torre Sevilla skyscraper and the hotel that will be opened in the former headquarters of Banco de Andalucía, promoted by Drago Capital, other properties are also now hanging up the ‘For Sale’ sign. According to local sources, another hotel that may soon change hands is the Tryp Macarena, one of the largest in the Sevillan capital.

The real estate company Nyesa has launched the sale of this property, located next to the Parliament of Andalucía, in the popular neighbourhood of Macarena. The starting price ranges between €40 million and €50 million, according to sources in the sector. The property has a four-star rating and 331 rooms.

Meliá is the chain that operates the hotel and the firm that sold it to the current owners in 2005 for €42 million. For the Bartibás family, which used to control the Horcona group, it represented its fourth hotel in Spain and the 25-year lease contract signed with the multi-national firm chaired by Gabriel Escarrer generated annual revenues of €2.2 million, according to Nyesa’s accounts.

According to sources at Meliá yesterday, “in most cases, when there is a transfer of ownership, the group continues as the manager, if that fits with the overall strategy”.

Nyesa Valores Corporación was created in 2008 from the integration of the real estate companies Nyesa and Inbesòs. Its huge debt, which exceeded €650 million at one point, forced it to file for bankruptcy in 2012, but it reached an agreement with its shareholders in 2014. Nevertheless, its shares are still suspended from trading and in 2015, its revenues amounted to just €2.6 million, compared with €186 million in 2008. After capitalising its debt, its shareholders include several banks, such as Popular (13.2%).

Original story: Expansión (by Lidia Velasco)

Translation: Carmel Drake

Irea: Hotel Investment Rose By 54% To €1,237M In YTDSept15

13 October 2015 – Expansión

Hotel investment is soaring in 2015. During the 9 months to September 2015, 77 transactions were closed involving 15,800 rooms, with deals ranging from the sale of hotels (already in operation) to the conversion of buildings into hotels. Investment volume amounted to €1,237 million, an increase of 54% compared with 2014, according to data published by the consultancy Irea.

Nevertheless, despite the record figures, the pace of investment slowed down during the third quarter, as a result of the election effect. In total, 14 transactions were closed between July and September, amounting to €196 million, compared with €699 million during Q2 and €342 million during Q1. Activity has been driven up by the sale of portfolios of assets, which accounted for 34% of investment volumes and 54% of rooms. The most noteworthy transaction in this category was the creation of Bay, the first pure hotel Socimi, by Barceló and Hispania; there was also the partnership signed between Meliá and Starwood Capital, with the aim of repositioning the Sol brand.

The sun and beach segment accounted for 68% of investments, with the Canary Islands leading the ranking as the star destination – €369 million was invested there. The Costa del Sol and Madrid also recorded significant increases, in contrast to Barcelona, where investment decreased by 15%, due to the impact of the hotel moratorium imposed by the city’s mayoress, Ada Colau.

By category, most of the transactions so far this year have involved 3-star and 4-star hotels, which has led to a decrease in the average price per room of €22,500, despite the rise in the number of rooms sold, which has increased from 6,192 in 2014 to 15,800 this year.

Socimis

In terms of the profile of investors, Socimis continue to lead the ranking. During the 9 months to September 2015, they invested €302 million, i.e. five times more than in 2014. Also noteworthy is the growing activity of international investors such as the Olayan Group (Saudi Arabia) and the Kangde Group (China), which have acquired the Hotel Ritz in Madrid and the Hotel Santiago de Tenerife, respectively.

Irea expects that 2015 will exceed the previous record registered in 2006 (€1,780 million) and that the level of investment will be maintained in 2016. Foreign Socimis and investors will continue to be the most active investors and hotel property groups are expected to start invested once again.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake