A subsidiary of Madrid-based Hispania Activos Inmobiliarios has signed an agreement with Grupo Barceló to create Spain’s first hotel REIT focused on the holiday resort segment. Part of this agreement includes the acquisition by Hispania in an initial phase of 11 Barceló hotels (3,946 keys) with an option to acquire five additional hotels (2,151 keys).
Once the transaction is completed and the option on the five additional hotels executed, Hispania will have invested €339 million (US$384 million), obtaining an 80.5% stake in the new REIT. Grupo Barceló will maintain 19.5% with the option to reach up to 49% through future capital increases.
Barceló will remain as the operator of the acquired hotels through lease contracts with an initial term of 15 years.
The valuation of the 16 hotels and two shopping centers included in the deal is €421million (US$477 million). It is expected that the REIT, following the execution of the option, will have an initial equity of €187 million (US$212 million) and a syndicated loan of €234 million (US$265 million). Hispania’s capital contribution will amount to a maximum of €151 million (total attributable investment of €339 million). The initial asset portfolio will have pro forma rental income of approximately €45 million (€40 million pro forma 2014).
The Barceló assets included in this agreement comprise most of its resort portfolio in Spain, located in the Canary Islands, Andalusia and the Balearic Islands. Out of the 16 hotels, more than 90% of the rooms available are in the 4-star category and considered leaders in their markets.
Hispania and Barceló have agreed to invest together an additional €35 million in the short term to complete the repositioning and updating of some of the properties.
The agreement signed between Hispania and Barceló starts an ambitious plan focused on increasing the portfolio of the new REIT, through hotel acquisitions or incorporations of existing hotels. The plan is to at least duplicate the size of the initial portfolio and reach 12,000 rooms, creating a Spanish resort portfolio managed by different leading hotel operators.
According to Hispania board member Concha Osácar, “Our objective and that of our partner, Barceló, is that the new entity becomes the first listed REIT focused solely on hotel resorts with a diversified portfolio in terms of hotel operators, and a steady income base, through lease contracts with a strong fixed income component and enough exposure to the future increase of the Spanish tourism market. The objective of the new REIT for Hispania and Barceló, is to become an instrument with which to attract institutional capital for the Spanish hotel industry, creating new sources of capital for the hotel industry.”
From Barceló’s perspective, “As a result of this transaction, we are creating a solid alliance with one of the most active investors in the industry,” said Barceló’s CEO Raúl González. “After this transaction we will be in a leading position to benefit from the concentration process that should take place in the Spanish hotel industry.”
Hispania has invested €112 million US$127 million), including capex for 2015, in six other hotels (five acquired in 2014 and one in 2015) managed by different hotel operators (Meliá, NH and Vincci), which could be included in the new REIT. This decision will be made by the partners during the second half of 2015.
With this agreement, Hispania will have committed €800 million (US$906 million) in 44 assets since its IPO on March 14, 2014.