• Blackstone ups Spanish holdings

Blackstone has acquired 14 assets from Hotel Investment Partners, giving it a platform of primarily coastal hotels with over 3,700 rooms in Spain.

The private equity group is expected to combine the resorts with part of the Banco Popular portfolio it acquired earlier this year.

The HI Partners portfolio was sold by Banco Sabadell for EUR631m, after reports had suggested that the bank would seek a public listing for the group. Blackstone is thought to have beaten Brookfield to the deal.

Anthony Myers, head of real estate Europe, Blackstone, said: “We are delighted to make another substantial investment in Spain and to have the opportunity to partner with the HI Partners management team, working with them to continue to execute their strategy of growing HI Partners into Spain’s premier hospitality business.”

Alejandro Puértolas, founding partner & CEO, HI Partners, said: “We are thrilled to partner with Blackstone.  Blackstone’s investment will allow us to maximise the value of our existing hotel portfolio for our investors and to focus on HI Partners’ continued growth across Spain. We thank Banco Sabadell for their support over the last two years, and look forward to taking the next step in HI Partners’ journey with an industry-leading and well-capitalised partner like Blackstone.”

The HIP Partners’ management team will remain at the group and continue repositioning the sites, a project begun in 2015.

Inmaculada Ranera, managing director, Spain & Portugal, Christie & Co, told us: “The deal proves the appetite of Blackstone for the Spanish market with this new deal within the hotel sector. This appetite might continue in the future, once they digest the assets they are now adding and I am confident they will continue looking for new opportunities within the resort market in Spain.”

The resort market is likely to be protected from the drop in tourism seen as a result of the recent referendum for independence in Catalonia. Tourist association Exceltur, said tourist activity in Catalonia had fallen by 15% in the weeks following the referendum compared to the same period last year.

José Luis Zoreda, VP, Exceltur, said that that bookings were “in freefall of around 20% for the last quarter of 2017, especially in Barcelona, in what is normally the high season for conferences, leisure and shopping tourism”, particularly among international tourists. Barcelona is also thought to have seen a drop in interest as a result of the terrorist attack in August.

The move was the second in as many months for Blackstone in Spain. In September Banco Popular sold a majority stake in its real estate asset portfolio to Blackstone Group. The portfolio includes approximately EUR30bn in real estate properties and loans, as well as Banco Popular’s real estate management company, Aliseda.

Banco Popular was bought by Santander on 7 June for EUR1 after European authorities rescued it from collapse.

The Spanish assets of the business were put at approximately EUR10bn. The assets will be transferred to a new company that will be 51% owned by Blackstone and 49% owned by Banco Popular.

Santander said that three international companies with long track records in the management of real estate assets had presented offers, but that Blackstone was selected as the successful bidder after submitting the best offer in terms of both its value and management plan.

It is thought that Apollo, Lone Star and Cerberus had all shown an interest in the deal.

CBRE described “an exceptional increase in hotel investment transaction levels” in Spain in the first half of the year, with investment volumes rising by 228% year-on-year and reaching over EUR2bn in the first half. The performance was driven by Spain’s economic recovery, attractive asset pricing and availability, making Spain the most liquid hotel market in the second quarter.

The figures were released on the occasion of CBRE Hotels advising Starmel, a JV between Starwood Capital and Meliá Hotels International, on the sale of a Spanish hotel portfolio, consisting of four Sol by Meliá branded assets in Ibiza, Mallorca, Lanzarote and Costa del Sol, one of the largest portfolio transactions in the history of the Spanish hotel market.

HA Perspective [by Katherine Doggrell]: Spain has been the European investment of choice for funds looking to a rising market and Blackstone has led the way in what we hear have been a series of competitive deals. But is the party over?

Xavier Batlle, senior consultant, Christie & Co, told us: “The deal, which gives Blackstone the best HI Partners assets, positions it as one of the leaders in Spain – the question now is when they will exit. We must assume they will follow a similar pattern to Hispania and look to make their exit in 2020.

“Another fund is likely to acquire the assets, but it’s a question mark. We are seeing a recovery in Egypt, Turkey and areas of north Africa and we have seen political instability in Spain and the attacks in Barcelona – there is a possibility of interest rate rises, growth is not at the same speed that it was in 2015 and 2016. Other funds will come – other hotel companies may buy the assets, we may see the bigger funds buying smaller and concentrating their holdings to achieve economies of scale in this maturing market. Looking three years out in the current market is as far as we can reasonably look.”

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