Azora has invested €148m to buy two five-star hotels in Portugal’s Algarve region on behalf of the APG-backed Azora European Hotel and Lodging Fund (Azora EH&L).
The Madrid-based European real estate investment manager said its fund has acquired the Tivoli Marina Vilamoura resort and the Tivoli Carvoeiro resort in a sale and manage back transaction with Minor International (MINT).
The hotels will continue to be operated by NH Hotel Group on behalf of MINT under the Tivoli brand for an initial term of 20 years, with options to extend for a further 10 years.
Azora EH&L was launched in July 2020 with a seed portfolio of 10 hotel assets and four urban hostel assets across Europe.
As a result of the latest deal, Azora said it has now committed over €680m (€305m of equity) on behalf of Azora EH&L which raised an initial €680m last year with backing from a group of global investors including Dutch pension fund manager APG.
The European value-add hotel fund has a €750m hard cap target, which when achieved together with leverage, will give the fund more than €1.5bn of investment firepower.
Concha Osácar, one of Azora’s founding partners, said: “We have a strong conviction that there will be a strong post-pandemic recovery in the European hotels and leisure sector, with significant pent-up demand following long periods of lockdowns and restrictions, particularly in the sun and beach markets.”
Osácar said this acquisition is another important milestone for the fund as it expands its portfolio into Portugal.
Dillip Rajakarier, CEO of Minor International, said: “We are pleased to be able to complete another one of our commitments to our shareholders in strengthening our balance sheet with this milestone in such a challenging time.
“The transaction further enhances the overall return of the Tivoli portfolio, in addition to the earlier transaction completed in 2019. The transactions generated an overall annual unlevered IRR of high teens for our Tivoli portfolio.”
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