German hotel specialist closes Spanish hotel buy

German hospitality specialist Seaside Hotels has emerged as the buyer of 100% of the Westin Valencia hotel in Spain, PropertyEU has learned.

The Carlton Group, a real estate private equity firm headquartered in New York, brokered the sale on behalf of Spanish financial group Bankia, in the lender's first large single-asset property disposal.

Although financial details were not disclosed, Carlton said that the property was sold for one of the best EBITDA multiples achieved for a Spanish hotel in the last 10 years.

'This was a very challenging transaction given certain investor hesitations on acquiring real estate in Spain,' noted investment banker Javier Beltrán, managing director of Carlton's Spanish office.

'Notwithstanding,' he added, 'Carlton was able to customise and execute a comprehensive marketing and due diligence strategy which produced multiple non-contingent, hard bids.' Overall, it's understood that over 50 investors underwrote the acquisition opportunity.

The Westin Valencia building dates back to 1917 and was transformed into a five-star hotel in 2006. It offers a total of 135 rooms and suites.

With offices in Madrid, Frankfurt, Milan, Athens, and Tel Aviv, The Carlton Group Europe has completed a number of hotel deals in the recent past, including the €250 mln recapitalization of the Four seasons Hotel in Milan, the $800 mln sale of the Savoy Hotel Portfolio, the €685 mln CIGA Hotel Portfolio, and the Villa d’Este five-star resort on Lake Como.

In Spain, the company has been awarded three new exclusive mandates in the last few months, and is currently advising on close to €1 bn of exclusive sales mandates throughout Spain and Portugal.

Seaside Hotels is the latest German investor to enter the Spanish property market, following similar moves by Union Investment and Deka Immobilien. The latter completed the purchase of an office building on the outskirts of Barcelona’s CBD, while Union Investment acquired Hotel Raval.

'We are seeing a number of institutional investors from Germany back in the market looking for quality product; the recent transactions from Deka and Union Investment may mark the beginning of a series of deals which should put life back into a market that has been dead for the past six quarters. Banks are also considering lending again, although conditions are still tight,' commented Manuel Martin, head of property for Spain at Henderson Global Investors.

He added: 'Over the last three months, the investor profile has moved from private equity/opportunistic funds to traditional core and core-plus.'

South American investors are also looking at the market. IBA Capital Parters recently received mandates from several South American investors to look for core properties in Madrid and Barcelona. The company is looking to invest between €400 and €500 mln in the Spanish property market.

‘There is strong interest from South American investors who wish to take advantage of Spain's market situation by investing in core assets which will generate capital gains when the market recovers,' IBA's co-founder and partner Sergio Garcia told PropertyEU.

The company has just acquired the El Corte Inglés department store on Barcelona’s main square in the largest single asset transaction completed so far this year in Spain. Located on the corner with The Ramblas and refurbished in the early 2000s, the iconic 8,000 m2 asset was bought in a €100 mln sale-and-leaseback with El Corte Inglés, which is the sole tenant of the seven-storey building.