Foncière des Régions has started 2017 by bulking up in the European hospitality market with the acquisition of 19 hotels in Spain for €542 mln.
The French REIT group, through its subsidiary Foncière des Murs, has bought a portfolio of hotels in Barcelona and Madrid from Spanish REIT Merlin Properties.
The portfolio consists mainly of 4-star hotels in central locations in Spain’s two main cities, with a total of 3,800 rooms. Spain is the third most popular tourist destination in the world, and Barcelona has become the main venue for business seminars and meetings in Continental Europe. The positive trend in tourist and business travel is expected to continue in 2017, FdR said.
The hotels acquired include the Barcelo Torre de Madrid and the NH Collection Colon in Spain’s capital city, as well as the Eurostars Gran Marina (pictured) and the AC Forum in Barcelona. All are leased under fixed or guaranteed-rental leases to well-known brands in the Spanish hotel industry such as Melia, Hotusa, Barcelo and NH Hoteles.
FdR said that with the acquisition it is pursuing its European development and partnership policy with leading operators in the sector. The company plans to carry out an active policy of asset management, to maximise the portfolio’s value-creation potential and with a net target yield of 6%.
Since deciding to expand beyond France, where it has been a long-standing partner to big hotel brands, FdR has become a leading player in the European hotel investment market, most notably in Germany, with a portfolio of €3.9 bn.
In the last two years the number of FdR’s partner brands in the hotel sector has risen from 5 to 17, while the European share, excluding France, has increased from 24% to 56%. With the latest €542 mln acquisition in Spain FdR ‘has crossed a strategic milestone and reached a significant critical size in the Spanish market’, the company said.
Foncière des Murs is planning a capital increase of €200 mln in the first half of this year, with preferential right of subscription being maintained. The main shareholders, accounting for 94% of capital, have already stated their intention to subscribe for a total amount covering the full proposed capital increase. The acquisition of the Spanish hotel portfolio is being financed in cash and by new debt over eight years at a cost of around 1.85%.
FdR’s manages a total of €18 bn worth of residential and commercial real estate across eight countries. The portfolio is concentrated in France, Germany and Italy.
