Madrid-based European private equity real estate manager Azora’s European Hotel & Lodging fund has completed its first acquisition since assembling its seed portfolio last summer with the purchase of the Arenas Resort Giverola, in the Northern Spanish Costa Brava, from Swiss hotel group Arenas The Resorts.
The fund, which raised €680 mln at a first close last year, will seek to reposition the asset into a nature and sport vacation destination including a 4-star resort with glamping options. Azora plans to invest €40 mln to carry out a comprehensive refurbishment and expansion of the existing facilities across both the hotel and camping elements.
Med Playa Group has been appointed as operator.
Spread over 35 hectares in a prime location at the heart of Costa Brava, the beachfront resort comprises a 213 apartment hotel complex, as well as a large campsite. It currently offers a number of high-quality amenities, including five restaurants and bars, sports facilities and swimming pools including a spa, as well as plentiful parking.
Work is already underway to transform the campsite into a modern ‘glamping’ destination, which on completion, will offer 125 bungalows, 62 tents and 126 caravan spots. The 213 apartment hotel element will be upgraded to achieve a 4-star rating with work undertaken two phases, the first of which is due to start in November 2021. Azora and Med Playa will reopen the hotel to the public next June.
‘Having completed the initial capital raise for our latest hotel fund last summer, we have patiently observed the sector against the backdrop of the pandemic while assessing a number of opportunities,’ said Monica Garay, senior partner and head of alternative lodging at Azora. ‘This significant acquisition is our first for the Fund since assembling its seed portfolio and presents us with an opportunity to fully reposition an extremely well-located resort in a popular destination area for domestic and international tourists.’
She added: ‘Following a period of limited tourism due to the Covid-19 pandemic, we retain our long-held conviction in the sector as an investment that will continue to be supported by societal trends. With the vaccine roll out successfully underway across Europe we expect a rapid rebound in many parts of the sector as travel and other restrictions are gradually eased. Costa Brava has historically attracted high numbers of tourists, while the resort’s outdoor focus has not only increased its resilience to the impacts of Covid-19, but will also allow it to recover faster than traditional resorts.’
Azora European Hotel and Lodging already owns 10 hotels, with circa 2,670 keys and 4 hostels with circa 1,200 beds, located across Spain, Portugal, Italy and Belgium.
With a first close of €680 mln and a hard cap of €750 mln, the Fund has an implied total capacity of more than €1.5 bn to invest in leisure hotel opportunities across Europe, with a significant proportion of the portfolio expected to be located in Spain, Europe’s most popular “sun & beach” destination. Azora will use its expertise to implement a value-add strategy for the Fund, through repositioning, refurbishment, and active asset management.
