CBRE GIP & Pygmalion Join Forces to Acquire 9 Hotels

13 November 2018 – Iberian Property

CBRE GIP and Pygmalion Capital Advisers LLP have recently established a new joint venture for the acquisition and repositioning of hotel assets in Europe, including Spain.

The partnership was launched through a formal tender, the acquisition of NPL’s debt and a portfolio of 9 four-star hotels in Spain, formerly belonging to construction group Urvasco.

The portfolio includes 1,650 rooms in hotels in Sevilla, Madrid, Bilbao, San Sebastian, Santander, Tenerife, Valladolid and Ciudad Real. Hoteles Silken will operate the assets through a long-term deal established with the joint venture, as part of a full repositioning program.

Alexander van Riel, in charge of CBRE GIP for Western Europe, said in a release: “We have entered the Spanish hotel market for the first time with the acquisition of a much sought-after portfolio. This transaction is in line with our global strategy to create strategic joint ventures with experts in the sector”.

And he added that “We will generate value through selective actions of added value and at the same time we will benefit from the stable and safe flow of stays. In time, we will make additional investments in hotels with indexed rentals”, he concluded.

Christophe Beauvilain, founding partner at Pygmalion Capital Advisers LLP, added that «This alliance underlines our vision for the market of buying, at desirable prices, a pan-European portfolio of businesses and hotels, taking advantage of the special circumstances provided by the growing market of bad loans (NPL)  which exists in Europe. The combination of European banks which remain highly exposed to bad loans and the countless debt funds that have been actively buying NPL portfolios, provides a large source of opportunities for investment and for our specialised strategy. Silken’s hotel portfolio provides us with a solid basis to carry out a fast expansion in the Spanish market given our growing flow of investment opportunities”, said the release.

Cuatrecasas law firm, directed by Fernando Bernad Ripoll, provided legal assistance. Christie & Co and JLL carried out the commercial and technical due diligence respectively.

Original story: Iberian Property (by Ana Tavares)

Edited by: Carmel Drake

Half Of Cruzcampo’s Former Site In Sevilla Goes Up For Sale

13 June 2016 – Andalucía Información

Investors and governments alike are trying to take advantage of the improvement in the economic environment to reactivate the real estate market in Sevilla. Whilst on Thursday, the Town Planning department put 19 plots of land in Sevilla, on which 1,440 homes may be built, up for forced sale through public auction, now comes the mandate for the confidential sale of half of the urban development rights over the large site of the former Cruzcampo factory, where the PGOU has authorised the construction of 1,963 homes, in addition to tertiary uses.

The site of the historical brewery on Avenida de Andalucía had gone from being a star project to a failing project. The Basque real estate company Urvasco, which acquired the plot during the golden years of the real estate boom, commissioned the design of a “high standing” neighbourhood to four of the star-architects at the time: Norman Foster, Jean Nouvel, Arata Isozaki and Guillermo Vázquez Consuegra, who…even had their photo taken together with Monteserín, the then mayor, on the balcony of the Town Hall, in 2006. At the time, sourcecs spoke about an investment of €750 million in the construction of a luxury neighbourhood that was going to boast a high category hotel with around 150 rooms.

Nevertheless, with the burst of the (real estate) bubble just two years later, the project ended up foundering, along with its developer, Urvasco, which was unable to meet its obligations with the banks that had lent it €330 million and so it had to hand over the land to a pool of financial entities and companies linked to them (around a dozen in total).

The ‘Compañía para los Desarrollos Inmobiliarios de la Ciudad de Híspalis’ is the owner of half of the urban development rights of this land (49.91% to be exact). The Company was constituted by Banco Popular, CajaSur, Caja Granada, Caja España, Caixa Catalunya, Cajastur, Caja Laboral, Bancaja and Caja de Ahorros de Extremadura.

This company, which had accumulated debt amounting to €294 million and losses of €200 million, filed for voluntary bankruptcy in January 2016 in the Commercial Court of Madrid, and its application was approved on 22 February. However, that has not represented an obstacle to the process to sell its urban development rights, entrusted to an intermediary company, which is looking for potential investors in a restricted process that will run until Friday (17 June), the deadline for the acceptance of offers.

The sales brochure highlights that the plot has a surface area of 18,286 sqm and is located just 400m from El Corte Inglés on Nervión Plaza (presented as the main shopping centre in Sevilla), as well as from Sevilla F.C.’s stadium and the Santa Justa train station.

The Interior Reform Plan definitively approved the development of 1,963 homes, of which 890 will be allocated for social housing, as part of a total constructible area for residential use of 225,823 sqm, as well as a further 29,345 sqm for tertiary use. Therefore, the gross buildable area amounts to 255,168 sqm.

All of this will be constructed on wide blocks located in the Southern area of the plot. The Northern section will be a green area covering more than 70,000 sqm. According to the sales brochure, “the proposed plans seeks to achieve a maximum liberation of space, of around 35% in total, for the enjoyment of citizens. To achieve this, the plans propose the construction of tall buildings, which in the case of the residential units will be 15-storeys high”.

Original story: Andalucía Información (by M. J. Florencino)

Translation: Carmel Drake

Sabadell To Invest €450M In Its Hotel Arm

4 December 2015 – Expansión

Hotel Investments Partnership (HI Partners), the hotel management and investment arm of Banco Sabadell, is backing itself forward to become one of the main players in the Spanish hotel sector. The firm wants to become one of the largest hotel owners in Spain, involving itself in the management of hotels and improving their income statements. “There is a significant opportunity in the market for the creation of large portfolios of hotel assets”, says Alejandro Hernández-Puértolas (pictured above, centre), CEO of HI Partners.

The company will invest €450 million over the next three years to refurbish and increase the value of its hotels, an amount that will be completely financed by Sabadell during this first phase.

The bank controls 99% of the company’s capital and Hernández-Puértolas and two other partners, Sergio Carrascosa and Santiago Fisas (pictured above, left and right, respectively), own the remaining 1%. Enric Rovira, Deputy CEO of the Sabadell, is the President of HI Partners, which has a dedicated team comprising 22 professionals and is managed independently of the bank.

Creation of two vehicles

Sabadell transferred 22 hotels with 1,600 rooms to HI Partners, after it had accumulated them on its balance sheet during the crisis as the result of foreclosures due to unpaid debts. Moreover, the entity has entrusted the team with the management of a portfolio of hotel debt amounting to €800 million, which as around one hundred assets associated with it. According to Hernández-Puértolas, around thirty of these hotels may be transferred to HI Partners over the next few years, increasing the number of rooms owned by the investment company from 1,600 to 8,000. Meanwhile, HI Partners is also analysing the purchase of assets in the market that are not linked to the bank.

For the management of this real estate portfolio, HI Partners has just constituted two new companies: HI Partners Holdco Value Added and HI Partners Holdco Gestión Activa. The first vehicle will be the focus of most of the company’s efforts and will receive around 90% of the investment. It will take ownership of the best hotels in the portfolio, notably the largest properties, those situated in premium areas and those capable of generating significant yields once they have been refurbished. This company currently owns three assets: the Hotel Prestige Coral Playa, located on the Costa Brava; the Silken Málaga – which HI has just purchased from Urvasco -; and the new hotel that the company is constructing on Calle Atocha in Madrid, which will be managed by the Axel chain.

The thirty-odd hotels to be transferred to HI Partners from Sabadell’s debt portfolio are also expected to be incorporated into the Value Added company. The challenge is for that vehicle to generate an EBITDA of €35 million in 2018 and of €70 million in 2021.

Meanwhile, HI Partners Holdco Gestión Activa now owns 19 hotels, the majority of which are smaller properties, located in secondary areas. The objective is to divest the majority of these establishments, although the firm wants optimise their management first. As such, it expects to sign agreements with several hotel operators to this end.

Original story: Expansión (by Sergi Saborit)

Translation: Carmel Drake

Project Formentera: Santander To Sell €170M Hotel Debt Portfolio

18 May 2015 – El Confidencial

A new portfolio of hotel debt has just come onto the market. At a time when investors’ interest in these transactions is at an all time high, Santander has put loans worth €170 million relating to 17 hotels up for sale.

A new portfolio of hotel debt has just come onto the market. At a time when investors’ interest in these transactions is at an all time high, Santander, the largest Spanish bank, has decided to pique the insatiable interest of international funds in this type of transaction through the launch of an operation known as: Project Formentera.

It involves a portfolio of loans worth €170 million, linked to 17 hotels. The majority are located in the Community of Valencia and the Canary Islands, which encourages operations with investors interested, primarily, in the holiday segment and in the (Canarian) archipelago.

The portfolio that Santander has just launched joins those being promoted by two of its main rivals, BBVA and Bankia, which have also decided to take advantage of the window of opportunity that has opened to try to offload some of their debts, which include loans that the financial entities are very keen to divest.

According to sources in the market, unlike what may happen in the residential market – a business the banks know very well, since historically they have had the best prepared teams to manage such assets when they fail – the hotel business is a very specialised segment, whose incident rate (casuística) is more difficult for financial entities to manage.

This means that their priority, in general terms, is to try and sell debt, rather than foreclose it and take ownership of assets that they are much less familiar with than residential. If we add the insatiable appetite of the large international investors for the hotel sector, fuelled by the perfect combination of low prices and a strong recovery in the tourism sector, now is the perfect time to carry out these kinds of transactions.

A string of transactions

In fact, at the end of last year, Bankia closed the sale of a batch of hotel loans to Starwood and Sankaty for €400 million (Project Amazona) and is now finalising the second part of that transaction, known as Castle, whose finalists are Apollo, Oaktree and Bank of America. BBVA has also just opened the bidding for 14 hotels it inherited from unpaid loans, a process known as Project Otelo; meanwhile Sareb has just engaged N+1 to manage the sale of a portfolio with a nominal value of €500 million, which is linked to the property developer Polaris World, in an operation known as Project Birdie.

And so the list goes on. A few weeks ago, the German bad bank FMS Wertmanagement sold the portfolio known as Gaudí to Oaktree for close to €500 million – a batch of problem loans linked to, amongst others, the iconic luxury hotel Arts de Barcelona, as well as another high-end property in Cascais (Portugal), five shopping centres, including Plaza Éboli and Heron City, several storage buildings, and residential and industrial assets.

Moreover, the large financial entities that signed the €152 million syndicated loan with the Basque property developer Urvasco, which, in turn, owns the hotel chain Silken, have spent the last few months selling their stakes both in this debt, as well as in those linked to certain establishments, including the Puerta de America hotel in Madrid; Bank of America is taking advantage of this window to enter through the ‘front door’ of what is considered to be the last great Spanish hotel chain up for sale.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Silken Hotels’ Owner Files For Bankruptcy With €400m Debt

11 February 2015 – Cinco Días

The British investment fund Carey lobbied for Urvasco to file for bankruptcy

Urvasco has suffered from financial imbalances for years. When the financial crisis hit, the company held substantial investments in its hotel and property development businesses. To try and solve its problems, it has sold assets ranging from wind turbines to works of art, but has not managed to balance its books. Finally, this month, Commercial Court No. 1 of Vitoria has issued an order for the bankruptcy of the group owned by the businessman Antón Iráculis, which has liabilities of more than €400 million.

Carey Value Added has lobbied for this process, according to the judgement issued by the magistrate María Teresa Trinidad. The British fund was a partner of Urvasco when they launched a hotel together in London; the project failed.

As a result of that failed investment, Carey was left with a debt of €68.9 million, which was recognised by the High Court in London in April 2013. In 2008, Urvasco did not obtain financing for the construction of the hotel in the English capital because the financial institutions realised that it did not meet the required solvency levels; this damaged Carey, which had already financed some of the investment in advance.

The British investment fund requested the recognition and enforcement of that foreign resolution in Spain. That resulted in a long dispute between both parties, which ended in the Commercial Court No. 1 of Vitoria. In her sentence, the magistrate María Teresa Trinidad stated that Carey “has proven the general non-payment of overdue obligations”, by both the Grupo Urvasco (UG), as well as by its subsidiary Grupo Hotelero Urvasco (GHU), which is 93.25% owned.

The magistrate also added that the debt of €68.9 million was recognised in GHU’s accounts at the end of 2013. This stake is managed by the hotel chain Silken, which includes 32 establishments, according to information gathered from the company’s website. The best known are the Puerta América in Madrid and the Dómine in Bilbao; the latter is located opposite the Guggenheim Museum. They also own the Ciudad de Vitoria in the Álavan capital.

In addition to its hotel business, Grupo Urvasco is one of the leading property developers in Spain, although its shares are not publicly traded. In Bilbao, it constructed the Torres Isozaki, which house almost two hundred homes along the Nervion River.

Urvasco has 20 days to file an appeal with the Provincial Court of Álava against its insolvency. Sources close to the process take it as a given that the company owned by Anton Iráculis will resort to this action, since it previously fought “hard” against Carey’s debt to classify it as “not overdue and under judgement” (pending judicial review).

A significant part of the Basque group’s liability is a syndicated loan amounting to €152 million with a syndicate of financial institutions, including BBVA, Banco Popular, EBN and CaixaBank.

The total debt balances will be disclosed over time, when the bankruptcy administrator, the company Sindicatura, collects all of the information. The creditors have one month to communicate the Grupo Urvasco’s non-payments and close its consolidated liabilities.

Original story: Cinco Días (by J. Vadillo/L. Salces)

Translation: Carmel Drake

Creditor Applies to Bankrupt Urvasco

20/10/2014 – Expansion

A lender has presented a bankruptcy petition to the Court of Vitoria for Grupo Urvasco, the main shareholder and manager of hotel chain Silken (the Al-Andalus hotel in Seville pictured).

The group has been dodging insolvency process for years and its current indebtness posts €600 million.

 

Original article: Expansion

Translation: AURA REE