Singapore-listed Mandarin Oriental International on Friday said it had teamed up with Saudi Arabia’s Olayan Group to acquire the 167-room Hotel Ritz Madrid in Spain for €130 million (US$148 million).
The joint venture partners will each hold a 50% stake in the property, which was acquired from Belmond Spanish Holdings and Landis Inversiones. In 2017, the hotel, which first opened in 1910, is expected to undergo a comprehensive US$103 million renovation.
Mandarin Oriental’s investment for its share in the project, including the acquisition, renovation and transaction expenses, is estimated at US$126 million, the company said in a regulatory filing. It will fund the acquisition from its cash reserves, while the renovation will be funded through an appropriate mixture of equity and debt.
Mandarin Oriental will take over management of the hotel from Belmond under a long-term management agreement.
For the year ended December 31, 2014, Hotel Ritz Madrid reported gross assets of €129 million (US$146 million) and an EBITDA of €2.6 million (US$3 million).
“We are pleased to join with Olayan for this project, which presents an exciting opportunity to extend our portfolio to another key European capital city,” said Edouard Ettedgui, group chief executive of Mandarin Oriental. “This beautiful hotel will complement our award-winning property in Barcelona, and both should benefit from the overall economic recovery in the country.”