Hispania finalises launch of €420m hotel REIT with operator

Spanish REIT Hispania said on Tuesday that it has finalised an agreement with hotel and resort operator Grupo Barceló to create the country's first hotel REIT focused on the holiday resort segment.

Under the agreement, which was first announced in February, Hispania will acquire a portfolio of 11 four-star hotels with a combined 3,946 rooms and one shopping centre in an initial stage. At a later stage, the Spanish REIT will have the option to acquire five additional hotels offering 2,151 rooms and a second shopping centre.

Hispania is investing €339 mln in the company in exchange for an 80.5% stake. Grupo Barceló will maintain a 19.5% interest with the option to boost this to 49% through future capital increases.

Barceló will remain the operator of the hotels through lease contracts with an initial term of 15 years.

The transactions value the 16 hotels and two shopping centres at about €421 mln, with the portfolio estimated to generate rental income of €45 mln a year. Upon closing of the acquisitions, the new hotel REIT will have an initial equity of €187 mln and a €234 mln syndicated loan.

The Barceló assets covered by the agreement comprise most of its resort destinations in Spain, including hotels in the Canary Islands, Andalusia and the Balearic Islands.

Hispania and Barceló have agreed to jointly invest an additional €35 mln in the short term in order to reposition and update some of the properties.

The companies said they also plan to start an ambitious acquisition programme with a view to 'at least duplicate the size of the initial portfolio'.

'The goal is to, at least, double the size of the portfolio, creating a Spanish resort hotel portfolio with assets managed by diverse leading operators in this market,' the companies said in a statement to the Spanish stock market regulator.

'This agreement will be key to potentiate our growth in the most relevant touristic areas of Spain,' commented Raúl González, CEO for EMEA at Hoteles Barceló.

Prior to the deal, Hispania had invested a total of €112 mln in six hotels managed by different hotel operators (Meliá, NH and Vincci), which the company hopes to be able to include in the new REIT in the future.

It is the latest hotel investment operation in Spain since the start of the year. Last month, US-based private equity firm Starwood Capital Group launched a joint venture with operator Melia Hotels International to acquire a portfolio of seven hotels in Spain for €176 mln.

Earlier this week, bank Rothschild reportedly started fundraising for a €400 mln hotel investment fund, known as Aina, which will be focusing on luxury assets.