Spanish REIT Hispania said on Wednesday that it has signed an agreement with hotel and resort operator Grupo Barceló on creating the country's first hotel REIT focused on the holiday resort segment.

Spanish REIT Hispania said on Wednesday that it has signed an agreement with hotel and resort operator Grupo Barceló on creating the country's first hotel REIT focused on the holiday resort segment.

Under the agreement, 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.

The deal is subject to the successful completion of the due diligence process.

Once the transaction is finalised, Hispania will have invested €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 included in 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.

'Spain is the third most important touristic destination in the world, preceded only by France and the United States,' commented Concha Osácar, board member of Hispania. 'Spain has almost twice the number of resort keys than the United States, as well as a well-diversified tourist base, with British, German and French visitors representing more than 50% of the total. This illustrates the opportunities which the industry offers in Spain.'

According to Barceló’s CEO, Raúl González, The deal allows the group to be 'in a leading position to benefit from the concentration process that should take place in the Spanish hotel industry'.

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

Osácar: 'Our objective and that of our partner Barceló, is that the new entity becomes the first listed REIT focused solely on hotel resorts, with a diversified portfolio in terms of hotel operators, and a steady income base, through lease contracts with a strong fixed income component and enough exposure to the future increase of the Spanish tourism market. The objective of the new REIT for Hispania and Barceló, is to become an instrument with which to attract institutional capital for the Spanish hotel industry, creating new sources of capital for the hotel industry.'

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.