Minor International has sold three hotels in Lisbon which it had acquired as part of the Tivoli portfolio.
Angelo Gordon joined the M&A trend in Europe, announcing that it was to acquire Gecina’s five-strong hotel portfolio, located in France, for more EUR181m.
At Angelo Gordon, group has agreed to acquire five hotels from Gecina, a French real estate investment trust. Gecina owned, managed and develops property holdings valued at EUR19.3bn at year-end 2018.
The deal comprises a total of 814 rooms across the properties; the Holiday Inn Paris Saint-Germain des Près and the Holiday Inn Paris – Notre Dame, the Courtyard Marriott Roissy near Charles de Gaulle Airport, the Courtyard Paris Boulogne and the Holiday Inn Hotel Paris Versailles.
Gecina said the deal was “in line with the group’s strategy to realign its business around its office and residential activities in the most central sectors of Paris and the Paris Region, and offers a premium of around 3.5% compared with the end-2018 appraisals”.
At the end of last year the firm closed its second European real estate fund, AG Europe Realty Fund II, with USD843m in equity commitments, exceeding the fund’s USD750m target. The group said that it would look to “identify complex and off-market investment opportunities with a focus on UK and Western Europe sub-performing distressed debt, office, retail, hotel, industrial and residential assets”.
Anuj Mittal, co-portfolio manager of European real estate, Angelo Gordon, said: “The real estate sector in Western Europe and the UK is still experiencing substantial levels of distress and dislocation. We believe our focus on buying transitional assets in geographies with strong fundamentals has proven successful and by using our large network of local partners, we are well-positioned to select the best risk-adjusted return opportunities in the region.”
Angelo Gordon has had prior experience of Europe’s hotel market, having acquired the Jolly St Ermin’s hotel in London in 2010 for GBP65m, alongside Amerimar Enterprises and GraceMark Investments.
The trio invested approximately GBP35m to renovate and reconfigure the hotel, including, converting an adjoining office building into additional hotel rooms. The hotel opened in April 2011 under Marriott International’s Autograph Collection, before being sold in 2015 to Taiwanese firm Sunrider International.
In Portugal, Minor International sold the Tivoli Avenida, Liberdade Lisboa, Tivoli Oriente Lisboa and Avani Avenida Liberdade Lisbon for EUR313m to Invesco. Minor acquired the hotels as part of its purchase of the 16-strong Tivoli portfolio in 2016.
Following completion of the sales, Minor subsidiary NH Hotel Group will operate the hotels under lease agreements for an initial term of 20 years with options to extend for a total term of up to 60 years.
“The completion of the sale and leaseback transaction is a key milestone for Mint, Minor Hotels and NHH,” said Dillip Rajakarier, COO Minor International and CEO, Minor Hotels.
The transaction marked Invesco’s first move into hotels in Portugal.
David Kellett, senior director hotel transactions, Invesco Real Estate, said: “This is our first transaction with Minor International and builds on our long-term relationship with NH Hotels. The opportunity to work in partnership with a strong European brand and experienced operator who we have had an excellent relationship with in the past is very exciting as we deliver a strong product to a growing marketplace.”
The deals came as France-based Reit Atream Hôtels acquired a six-hotel portfolio in Belgium for EUR73m, from an undisclosed seller. The properties were leased to two hotel operators, Martins Hotels and Different Hotels, for an average lease term of 24 years.
Pascal Savary, chairman, Atream, said: “In 2018, the contribution of tourism to Belgium’s GDP was 5.3 %, or EUR24bn in spending related to this business sector that accounts for 274,000 jobs. The hotel sector is driven by the presence of the European Union’s main institutions, many corporations and diplomats. In the months to come we will pursue our investment strategy, by positioning ourselves in hotel assets leased by leading operators over the long term and in markets where the tourism industry contributes fully to economic growth.”
Atream’s portfolio comprises 70% hotels and 30% non-hotel residences, such as aparthotels.
HA Perspective [by Katherine Doggrell]: The European hotel market looks all very shiny and buoyant, with brands popping up all over and so many visitors that some capital cities are busy pulling up the drawbridge to keep them out, or at least reduced to a manageable level. Finding hotels is costly and many brokers are starting to whisper about the top of the market.
For Angelo Gordon the chance to pick up well-located hotels came as Gecina stuck to its promise to offload the sites, which it acquired as part of its EUR2.5bn takeover of Eurosic in 2017. Hotels aren’t for everyone, but, with the sale long flagged-up, we understand that bidding was feisty.
Treading a less popular path was Invesco, with Portugal being observed with similar trepidation to Italy by many investors. One wonders whether, having got this deal over the line, Minor International is now going to dig deeper into the NH portfolio to deaden the pain of the money paid for its takeover of the Spanish company. It seems likely.