The European joint venture of US REIT Host Hotels & Resorts has spent Eu417m of its Eu1bn or so pot for acquisitions on the Arts Barcelona.
The 483-room Ritz-Carlton went for 13 times current year EBITDA which is forecast to be Eu32m.
The transaction was the largest ever single asset real estate deal in Spain's history, according to Jones Lang LaSalle Hotels, who advised the buyer.
Back in March, Host formed its JV with Dutch pension fund Stichting Pensioenfonds and Jasmine Hotels, a subsidiary of GIC Real Estate, the property investment company of the Government of Singapore.
The venture – held 19.9% by Stichting, 48% by GIC and 32.1% by Host – was formed to buy six hotels in Europe from Starwood Hotels. This deal cost $621m but the JV raised Eu1.5bn in total and at the time said further acquisitions were being sought.
The Arts deal included the assumption of Eu280m of debt by the JV and is expected to close next month. According to Spanish press reports, the vendor, Hovisa, a consortium of owners led by Javier Faus and including Deutsche Bank (the majority holder with a 75% stake), Patron Capital Partners (with 16%) and a number of high net worth individuals, is understood to have generated a capital gain of Eu120m.
Host itself pleased the market with its second quarter results announcement, posting a 56% rise in funds from operations (earnings). The company said revpar could increase by as much as 10% for the full year and that this trend would continue through into 2007.
At least in the US, Host believes there are more opportunities for capital investment in its existing hotels rather than by making acquisitions. It expects to be able to make high return developments at a number of its recently acquired Starwood properties.
It is also looking hard at timeshare, which it operates via a taxable subsidiary. It currently has a project with Hyatt in Hawaii but believes there may be a half-dozen or so opportunities within its portfolio for timeshare and / or residential development. It may do these projects itself, again via JVs, or it may simply sell the land.
The operator of the Arts, Ritz-Carlton, also saw its flagship property on the other side of the European continent refinanced. Merrill Lynch Capital Markets and Aareal Bank have put up Eu160m for the Marriott brand's property in Moscow.
The private equity developer of the 334-room property, Capital Partners, said it was the largest financing by Western banks in the Russian property market. JLL was an adviser to Capital Partners.