Rothschild Launches Fund To Invest €400M In EU Hotel Sector

13 April 2015 – Expansión

The wealth management specialist creates a real estate (investment) vehicle.

Edmund de Rothschild, the group that specialises in the management of large fortunes, is breaking into the hotel sector. Aina is the name of the real estate fund that Rothschild has launched with the aim of purchasing four- and five-star hotels, (of between 90 and 150 rooms and between 150 and 450 rooms) in Europe.

Managed by Jaume Tapies, the former Chairman of the international network Relais & Chateaux, Aina is seeking to raise more than €400 million, and more than half of that amount will relate to debt. The roadmap predicts the signing of around 20 transactions with an average value of around €20 million to €25 million.

Aina has identified 29 cities of interest, due to their potential for tourism and business, where there is no excess supply or barriers to entry. The list includes two Spanish cities, Madrid and Barcelona, and two others may join them, namely Sevilla and Bilbao. “Spain is a priority country and now is a good time to invest there, as well as in Italy and Portugal, and in the major capital cities such as London, Paris and Amsterdam”, says Tapies.

Aina, whose investment plan will take two years to complete, has a process open with institutional investors to secure €200 million in funding, which is about to close. Edmund de Rothschild will be responsible for the administration and custody of the funds. The minimum investment required to participate is €1 million. The fund will have a life of seven years and the investment period will be three years. The gearing ratio will range between 40% and 50% of the total portfolio value, and on an exceptional basis, may reach up to 60% for a single asset.

Profitability

The strategy also centres on risk diversification. One single hotel may account for 25% of the investment, at most, and no single country may account for more than 40%. On the other side of the scale, profitability will also be high, at 15% p.a., based on the profitability of the rental income and the potential for the increase in the value of the assets.

The fund will focus on finding properties with discounts of between 25% and 40% of their market value. Subsequently, it will increase their values by between 25% and 30% by redesigning their operating models and will obtain a similar percentage from the sale of these properties to investors that have lower long-term profitability requirements.

So far, investors from Spain, South America, Australia and Asia have all expressed their interest in participating in Aina.

In addition to the management team led by Tapies, Aina has an advisory board, which includes, amongst others, Charles Petrucelli, former Chairman of the travel division of American Express; Antoine Corinthios, former Chairman of Four Seasons in EMEA; and Jean-Jacques Gauer, for Chairman of Leading Hotels of the World.

Gabriel García is also advising the fund; he owns the Hotel Orfila in Madrid and is the Chairman of Relais & Chateaux in Spain.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

CBRE Enters The Real Estate Wealth Management Segment

18 March 2015 – Expansión

CBRE, the multi-national consultant and real estate services company, has launched a Wealth Management division in Spain, which will specialise in the management of large property estates. To this end, the US company has hired Etienne Brocas, who will advise domestic and international investors in the acquisition of properties in the country, where assets are particularly “attractive in terms of price and yields compared with those in other European countries”.

The entry of CBRE into the Wealth Management segment is one of the goals mentioned by the company in its Strategic Plan for 2014–2016. The objective of that plan is to double the company’s turnover “through organic and inorganic growth, and to expand into new and innovative business streams”.

Experience

Etienne Brocas has more than 25 years of experience in the real estate market and 16 in private banking. He was the CEO of Santander Private Banking’s real estate arm and CEO of the same sector for Western Europe at UBS Wealth Management.

Original story: Expansión (by J.B.)

Translation: Carmel Drake