The Blackstone Group has agreed the has agreed new long-term leases on seven Center Parcs resorts located in the Netherlands, Germany and Belgium.
The private equity group will also invest EUR200m in the properties, fuelling rumours of a potential sale, shortly after HNA exited from its jv with Pierre & Vacances, which operated the sites.
Blackstone acquired the resorts in 2006 for around EUR630m, but kept Center Parcs Europe as a separate entity from Center Parcs UK which the private equity group acquired in a separate transaction in the same year and then sold to Brookfield Property Partners in 2015.
The sites were owned by French leisure group Pierre & Vacances, which also owned a further nine Center Parcs properties in Europe and continued to operate the properties.
Under the terms of the new agreement, Blackstone will invest EUR200m in the renovation of the facilities and accommodations in the seven largest holiday parks: De Kempervennen, De Huttenheugte, Het Heijderbos and Het Meerdal in the Netherlands, Erperheide and De Vossemeren in Belgium and Bispinger Heide in Germany.
Around 85% of the investment will be in the 4,800 cottages, with the remainder in the Aqua Mundo subtropical swimming paradise, the central facilities, the infrastructure and new forms of experience.
Pascal Ferracci, CEO, Center Parcs Europe, said: “People need a carefree stay and are looking for surprising moments and unique experiences to share together. That is why we signed an agreement with Blackstone, which allows us to invest EUR200m in the renovation of our seven largest parks in the Netherlands, Belgium and Germany. With this investment we want to reinforce the unique character of each park to meet the changing needs of our guests.
“With this extensive innovation programme we want to set a new standard in experience, stay and togetherness. We want to keep surprising our guests, while they spend time with their family and are really together.”
The group was also looking for a new partner in China after December last year saw HNA Group exit from its 10% shareholding in P&V, selling it to Société d’Investissement Touristique et Immobilier at EUR15.93 per share.
The pair also had a joint venture which planned to expand into China, 60% of which was owned by HNA. P&V said: “Negotiations are well underway with a new partner to invest in the capital of this company in order to strengthen the expansion of the Pierre & Vacances-Center Parcs Group in China, on the basis of partnership agreements set up with local property developers.
“This disposal agreement brings to an end the capital and commercial ties between HNA Tourism and Pierre & Vacances-Center Parcs due to the financial restructuring underway at the HNA Group. It paves the way for partnerships with top-ranking Chinese financial and professional groups.”
The jv was signed in 2015, aimed at creating holiday destinations near cities including Shanghai, Beijing, Chengdu and Fuzhou. In addition, the pair were to look at ski resorts to take advantage of the demand likely to build around the 2022 Winter Olympics, due to be held in Beijing.
HNA had said that it was committed to providing an estimated EUR1bn funding for the five first projects over the next three years. Beyond these projects, two projects per year are expected to be developed and funded by “various institutional investors”. No sites have yet opened.
P&V’s first quarter results, released in January, saw Center Parcs Europe contribute EUR103.7m in revenue, up 2.7% on a like-for-like basis, driven by good performances from Villages Nature Paris and sites located in the Netherlands.
Center Parcs UK was acquired in 2015 by Brookfield Property Partners for an undisclosed sum from Blackstone Group, thought to be around GBP2.4bn. At the time, Ric Clark, CEO, Brookfield Property Group, said: “Although these resorts are already producing steady streams of cash flow supported by nearly full occupancy year-round, we see compelling opportunities to grow the business and enhance our investment returns.”
It was expected that this would mean expansion in the US, but the company went on to announce that the sixth village would be in Ireland, with 470 Lodges. The property was due to open in 2019.
HA Perspective [by Katherine Doggrell]: Holiday parks have been big business in Europe (and by this we still, at the time of going to press, include the UK) with any number of people happy to spend a week swimming around in a dome in a manner which recalls public information films from the 1950s about what life will be like in The Future.
Last year’s sale by Wyndham of its European vacation rental business to Platinum Equity for approximately USD1.3bn suggested that the sector may be ripe for consolidation and, Blackstone already having offloaded the business in the UK to Brookfield, was showing all the signs of thinking it’s time to find a new home for the European business, or at least the chunks which it owns. This is likely to be a shade more complex than in the UK, with P&V in tow and unlikely to be open to any rebranding.
As for P&V, they have found themselves caught up in the great HNA retreat, with no Jinjiang to clear up. Do the Chinese also have a taste for swimming in bubbles? Fosun’s appetite for expanding its Foliday family holidays platform suggests that they do.