Madrid-based real estate investment manager Azora, via its Azora European Hotel & Leisure Fund, bought Italy’s Bluserena resort brand on Nov. 30 for an undisclosed price from the Maresca family.
Javier Arús, Azora’s managing partner of hotels, said the fund has placed approximately 55% of its 1.8 billion euro ($2.04 billion) pool.
Arús said the Italian resort company is among the largest owner-operators of resorts in Italy, depending on how it is measured, and the deal has been three years in the making.
The Bluserena brand includes 13 hotels with a total of approximately 4,200 rooms. Eight of those hotels — with approximately 3,000 rooms — are under its ownership. Founded in 1985, the firm’s assets are all in coastal destinations, apart from one ski resort.
The assets are seasonal, opening for between 160 and 180 days per year.
Azora plans to allocate approximately 30 million euros in capital expenditures on the owned assets, the company announced following the signing.
“The Maresca family was intrigued by our transactions with Hispania and deals we had reached with other families. They wanted to divest from hotel interests. It is a conglomerate with interests also in energy and construction,” Arús said.
COVID-19 got in the way of agreements that were previously under consideration. Initially there had been an exclusivity agreement on the deal, but due to the pandemic, there was a need to bring in business advisory CBRE to restructure, he said.
“The pandemic has made it more complex to see assets, complete due diligence and to meet face-to-face,” he added.
Italy is a tough market to crack, he added, perhaps the most highly fragmented market in Europe.
“The Italian market, the culture, gastronomy, shopping. We need to be exposed to it, and to gain significant presence. It is very labor-intensive, but this deal gives us a good platform,” Arús said.
The Bluserena deal has the Italian domestic market firmly in mind, but there is passion to bring some international business in, too, he said.
“Italy is a very strong domestic market. Most guests are Italian, and it proved resilient during COVID-19. There is a good base for developing the business, with most guests arriving by car.
“On top of that, there are opportunities to add to Italy for international demand, and this will be actively promoted,” he said, adding that Azora already owns one property in Sicily — the 529-room Grand Palladium Sicilia Resort & Spa, in the town of Cefalú, which it acquired when it took majority ownership in Grand Palladium Hotels & Resorts in 2019.
“[Bluserena] is a very family-oriented product,” Arús said. "Average stay is in excess of 10 days, even 15 in the summer.”
Italian Issues
Arús said it is difficult to deploy capital “when you need to go deal by deal.”
“We also have been looking at other deals in Sicily and Sardinia, and you will see us do more individual deals in the area of 30 million euros to 40 million euros in Italy. The execution, the due diligence, the financing, they’re similar in Italy as they are in Spain and Portugal,” he said, referring to two other Mediterranean countries central to Azora’s investment strategy.
Arús said both organic and acquisition growth options are open, both in general terms and in adding to the Bluserena platform.
“Not every hotel is applicable to Bluserena, which is a private-equity investment that needs to be sustained,” he said, adding the management team for the hotels will remain in Pescara, Italy.
The deal price is undisclosed, but Arús said it is comparable with recent deals.
“We are not overpaying to enter the Italian market. The 2021 actual numbers are very much what we anticipate prices will be in 2023, so that provided a good scenario in underwriting," he said.
“We did agree on some aspects [of the price] in 2020, so 2021 was at our own risk. Part of the price was deferred, so eventually [the Maresca family] will see some upside,” he added.
He said the firm plans to spend 10,000 euros in capital expenditures per room, on average.
“That is a refresh. This is not a turnaround story. [Bluserena has] been successful, and we are happy to build on that. There is no distress,” he said.
Extra Firepower
The Azora fund still has legs, with approximately 800 million euros more to invest, Arús said.
“We’re actively looking at Portugal, a very important market … and we have spent resources in the Greek market, but so far there we have had no luck," he said.
“Spain, of course it is our core market, although there has been less [transaction activity] there than we anticipated, [and] we do not have so much in the Balearic Islands, nothing in the Canaries, and we’re limited in Costa del Sol, so, yes, we will be very active,” he added.
He said the company is more secure, being on the “sunny side of the industry” — that is, in the leisure market.
He said while the world needs to further protect itself against COVID-19, he expects summer 2022 to play out similarly to summer 2021.
“With the exception of the [United Kingdom] market, which was almost non-existent. I hope it comes back. We do see a path back to normalization,” he added.
One area of concern is the 70-year-old to 80-year-old market, which he says enjoys traveling in winter but is not doing so due to health worries.
“That population is more concerned, and tour operators are not putting [them] back on flights. It could be a tough winter,” Arús said.