Expanding its portfolio into Portugal, Madrid-based Azora has completed the acquisition of the 383-room Tivoli Marina Vilamoura resort and the 248-room Tivoli Carvoeiro resort in Portugal’s Algarve region on behalf of its Azora European Hotel and Lodging Fund through a sale and manage back transaction for €148 million (US$174 million), including a variable price, with Bangkok’s Minor International.
The resorts will continue to be operated by NH Hotel Group on behalf of Minor under the Tivoli brand for an initial term of 20 years, with options to extend for a further 10 years. Minor acquired the NH Hotel Group for €2.3 billion (US$2.7 billion) in October 2018.
The transaction means that Azora has now committed over €680 million (US$801 million), including €305 million (US$359 million) of equity, on behalf of the Fund, which achieved a €680 million first close in summer 2020. It also follows Azora’s recent acquisition of the Giverola Resort, a 213 apartment-hotel complex in Spain’s Costa Brava, in April 2021. The Fund was launched in July 2020 with a seed portfolio of 10 hotel assets and 4 urban ho(s)tel assets across Europe.
“We have a strong conviction that there will be a strong post-pandemic recovery in the European hotels and leisure sector, with significant pent-up demand following long periods of lockdowns and restrictions, particularly in the sun and beach markets,” said Concha Osácar, one of Azora’s founding partners. “As we emerge into a post-COVID world we have built a strong pipeline of further investment opportunities and are progressing discussions with the owners and operators of some of Europe’s finest hotels, such as the two Tivoli Hotels we are acquiring today, with many of owners seeking to recapitalize and work with a landlord like Azora that understands the dynamics of the sector and can be a long-term partner.”
Minor CEO Dillip Rajakarier added, “The transaction reiterates the combined strength of MINT and NHH in the execution of another strategic asset rotation with a respected real estate institutional investor in Europe, following the sale and lease back of the NH Collection Barcelona Gran Hotel Calderón last month. It reinforces yet again our ability to spot a quality asset, make investments to enhance the value, and subsequently realize such value. We are pleased to be able to complete another one of our commitments to our shareholders in strengthening our balance sheet with this milestone in such a challenging time.”
Rajakarier said the transactions generated an overall annual unlevered IRR of high teens for its Tivoli portfolio.
Over the past 5 years, €12 million (US$14.1 million) has been spent on capex within the Tivoli Vilamoura. In addition, a new congress center (the largest in the Algarve) was built in 2018, immediately adjacent to the hotel.
The Tivoli Carvoeiro recently concluded a four-year, phased remodeling and refurbishment, with €15 million (US$17.7 million) of capex invested.