Newly listed Spanish investor Hispania Activos Inmobiliarios has made its first property investment, buying a hotel in Marbella for EUR21.5m.
The company has been set up to invest in Spanish real estate over the next three years, with the potential to then sell out in the following three years, or else sit tight as a longer term investor. It is intended the vehicle will convert to a REIT in the near future.
Hispania raised EUR550m in March from investors including Soros Fund Management, Quantum Strategic Partners and Paulson & Co, alongside Dutch pension fund APG Management, Fidelity International, Credit Suisse and Goldman Sachs. The Marbella deal is the first evidence that Hispania can move quickly to pick up property assets, and pay off bank loans against them.
The 178 room Hotel Guadalmina is a four star property, run under a management contract expiring next March, and Hispania has bought the property and paid off mortgage debts of around EUR13m held by Banco Sabadell against it. There are plans to spend on refurbishment and upgrading the property to create a more upmarket establishment. “This deal confirms our competitive advantage of access to quality assets through debt positions and off-market transactions, “said Concha Osacar of Azora, an advisor to Hispania. “The Costa del Sol and Marbella in particular, is an area in which we focus from Hispania and we intend to continue to invest.”
Hispania is linked to Spanish hotel manager Azora, who have provided two board members, and is headed by former CEO of Endesa, Rafael Miranda. It has said it will invest in residential and office sectors, as well as in hotels. Also on the board are representatives from Banco Sabadell and Ferrovial Bankia.
HA Perspective [by Katherine Doggrell]: Investing in Spain has not been hip with the kids in recent years. Talking to Hotel Analyst, Inamculada Ranera, managing director, Spain & Portugal, Christie & Co, said: “In 2012/2013 there was very little transactional activity – there was no confidence and investors viewed the Spanish economy as being ‘on hold’. Then suddenly, as the macro-economic data improved, everything changed. All major foreign investors are now focused on Spain.”
Some aspects of the Spanish hotel market have been resilient thanks to foreign tourism with coastal areas strong (thumbs up to Marbella), although some secondary cities such as Madrid, which rely on domestic demand, have suffered. Madrid, Ranera said, is now coming back “bit by bit. Easter was good – there were signs of good internal demand”.
The main attraction for investors is, she says, “non-performing loans. There are portfolios coming onto the market, some from bad banks and some where banks are pushing groups to sell assets. There are lots of opportunities for operators to come into the market”.
One of the more intriguing of these debt projects is Project Octopus (because it gets its tentacles in everywhere/because everyone is left with ink on their hands?), the name given to the effort by Commerzbank to find buyers for a reported EUR4bn-worth of Spanish real estate loans. In February the group sold EUR710m in non-performing loans from the sector to international investors, a deal which the bank said halved the volume of non-performing loans in its Spanish commercial real estate portfolio from approximately EUR2bn to approximately EUR1bn.
It is not known how much of the portfolio is linked to hotels, but, with the country’s hotel sector notoriously fragmented and unbranded, now might be the time to pal up to rumoured buyers such as Blackstone and Deutsche Bank.