French listed property group Covivio’s 43%-owned hotel arm and NH Hotel Group have completed the acquisition of the Dedica Anthology portfolio of eight luxury European hotels for €573 mln, including €86 mln of capex.
The transaction, which was agreed with landlord Värde Partners in January, was initially due to complete in June but the closing was postponed to September following the coronavirus outbreak.
The deal marks Covivio’s debut in Italian hotel investment and is the largest hotel portfolio transaction to take place so far this year. Totalling 1,115 rooms, the portfolio includes several emblematic hotels such as the Palazzo Naiadi in Rome, the Carlo IV in Prague, the Plaza in Nice and the NY Palace in Budapest. It also includes hotels in Florence and Venice.
The assets will be operated by NH Hotel Group through long-term triple net lease contracts with minimum guaranteed variable rent, generating a minimum yield of 4.7%. The agreement has an initial duration of 15 years, with an option to extend to 30 years.
Covivio is pursuing a capex programme of €86 mln for the entire portfolio, but particularly for the Florence and Nice assets, which are under renovation (around €56 mln of capex expected), and will reopen respectively by end-2020 and in the second semester of 2021.
Värde began buying the debt of the company holding the assets in 2016, ultimately acquiring 100% of the equity in 2017. It then proceeded to transform the hotel group by appointing a best-in-class management team, refinancing the business, and executing an ambitious investment programme. In 2018 the hotels were re-branded The Dedica Anthology.
Eastdil Secured, Ludovici Piccone & Partners and Gianni, Origoni, Grippo, Cappelli & Partners acted as advisors on the transaction.
