Octanto Rev I, a new innovative structure to invest in hotel assets across Europe, has been launched targeting some €300 mln worth of acquisitions.
The fund, which was set up by Italian businessman Enrico Meneghetti, is structured as an investment vehicle focused on hotel properties which are taken over, securitized and sold out to investors through the issue of 10-year senior and junior notes. As such, market experts say it is the first such securitisation vehicle in Italy and possibly in Europe.
‘With Octanto Rev 1 we want to “democratise” the access to real estate investments,’ Enrico Meneghetti, CEO of Enma Capital & Partners, which advises on the operation, told PropertyEU. ‘The new vehicle is aiming at institutional investors, family offices and HNWI that are looking to add value to iconic tourist locations in Italy. Every single investor can choose which asset he wants to link its investment to. It’s a liquid investment, traded on the MTS platform, regulated by the Bank of Italy, and does not force investors to lock their money for years waiting for their return.’
Octanto has already raised €185 mln of capital and is targeting total equity commitments of around €300 mln by the end of the year, according to Meneghetti. The fund is believed to have set its sights on Rome for the next acquisition.
The fund has already bought two major hotel properties in Porto Cervo, on Sardinia’s Emerald Coast. The assets are planned to be fully restructured with the new opening scheduled for 2022 and 2023 under the Rosewood and Delano luxury brands respectively. Following the acquisition, Octanto will issue senior, senior capex and junior notes secured against the assets, dedicated to both private as well as institutional investors. The senior notes, with a 10-year maturity, will provide investors with an attractive 5% annual fee as well as extra fees at maturity linked to the gains realized on the sale of the properties.
Hotel ventures
It is the second major hotel investment vehicle launched in recent weeks. Last month, PropertyEU reported that CEE-focused investment manager and hospitality specialist Revetas had just launched a Strategic Hospitality Investment Partnership (SHIP) that will pursue active strategies aimed at recovering, preserving and enhancing asset value.
The programme, which covers Central and Western Europe, seeks to provide divestment solutions as well as liquidity lines for working capital and capex investments to hotel owners, while looking to inject fresh capital alongside owners and lenders to restructure and reposition the wide spectrum of hospitality assets affected by the pandemic.
SHIP is expected to invest €300-400 mln in the near term with the potential to reach €1 bn over the next three years, according to founding partner Eric Assimakopoulos.
‘We think the hospitality sector will be the hardest-hit sector post Covid-19. The industry was expected to generate $620 bn of revenues globally this year and it will likely end up at 20-30% of that, which means it will need capital to the tune of several trillions to recover. We also believe it will take the longest to recover, because it needs the long-haul tourism, business travel and airline industry back in place,’ Assimakopoulos told PropertyEU in an interview.
Pricing shifts
Pricing shifts in Europe’s hotel market are creating attractive investment opportunities, with an increasing number of hotel groups looking to improve their balance sheets through sale and leaseback agreements.
‘A second wave of the pandemic across the continent will continue to create further headwinds for the hotel industry but opportunity funds are targeting the sector and selective value-add and development projects are continuing to attract debt and equity funding,’ commented Tim Stoyle, head of Savills Hotels Team, EMEA.
Four different vendors put Spanish hotels up for sale last week, with one of Barcelona’s most luxurious among them.
