Hispania launches hotel arm via €123m deal with Barceló

Spanish REIT Hispania said on Monday that it has acquired an 80.5% stake in Bay, the owner of 11 hotels, thereby finalising the first stage of a joint venture agreement signed earlier this year with operator Grupo Barceló.

Hispania has invested €123 mln to buy the interest in Bay Hotels & Leisure, which owns 11 vacation hotels with 3,946 rooms, located in the Canary Islands, Balearic Islands, Huelva and Almería and a shopping centre located in Fuerteventura.

The portfolio was last valued at €229 mln, roughly 10% more than Hispania's acquisition price of €207 mln, the group added.

'With the execution of this first phase, Hispania starts its path along with Grupo Barceló and with the firm intention of continuing to grow in its resort hotel strategy, one of the main focus areas for Hispania,' the Spanish REIT said in a statement.

Hispania first announced in April that it had 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, Hispania is investing a total of €339 mln in the company, known as Bay, 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.

In total, the transaction involves 16 hotels and two shopping centres valued at about €421 mln, with the portfolio estimated to generate rental income of €45 mln a year. In the second phase of the transaction, Bay will exercise an option to acquire five additional hotels offering 2,151 rooms and a second shopping centre valued at €227 mln. Closing is expected before the end of the year.

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.

Hispania went public in May 2014 and has since built up a portfolio consisting of 128,00 m2 of offices, 684 dwellings and 9,031 hotel rooms.