Azora, the Madrid-based European real estate investment manager, has completed the acquisition of two 5* hotels in Portugal’s Algarve region on behalf of its Azora European Hotel and Lodging Fund (“Azora EH&L” or the “Fund”), through a sale and manageback transaction for €148 million (including a variable price) with Minor International (MINT), the international hotel, restaurant and lifestyle group which acquired the NH Hotel Group for €2.3 billion in October 2018.
The two hotels, which comprise the Tivoli Marina Vilamoura resort and the Tivoli Carvoeiro resort, will continue to be operated by NH Hotel Group on behalf of MINT under the Tivoli brand for an initial term of 20 years, with options to extend for a further 10 years.
The transaction means that Azora has now committed over €680 million (€305 million of equity) on behalf of the Fund which achieved a €680 million first close in summer 2020 and follows Azora’s recent acquisition of the Giverola Resort, a 213 apartment-hotel complex in Spain’s Costa Brava, in April 2021. The Fund was launched in July 2020 with a seed portfolio of 10 hotel assets and 4 urban ho(s)tel assets across Europe.
The 5* Tivoli Vilamoura resort, located on Vilamoura’s marina, offers 383 waterfront rooms and suites, with facilities including seven restaurants and bars, a spa, and sports and leisure facilities. Over the past 5 years, a total of €12 million (€31,000/key) has been spent on CapEx within the hotel and, in addition, a new congress centre (the largest in the Algarve) was built in 2018, immediately adjacent to the hotel.
The 5* Tivoli Carvoeiro Algarve Resort is located on the Vale Covo cliffside in Carvoeiro, with 248 rooms and suites, and facilities including five restaurants, the Tivoli spa and a large event space. The hotel has recently concluded a 4 year, phased remodeling and refurbishment, with a total of €15 million of capex invested (€61,000/key).
Concha Osácar, one of Azora’s Founding Partners, commented: “We have a strong conviction that there will be a strong post-pandemic recovery in the European hotels and leisure sector, with significant pent up demand following long periods of lockdowns and restrictions, particularly in the sun and beach markets. As we emerge into a post COVID world we have built a strong pipeline of further investment opportunities and are progressing discussions with the owners and operators of some of Europe’s finest hotels, such as the two Tivoli Hotels we are acquiring today, with many of owners seeking to recapitalize and work with a landlord like Azora that understands the dynamics of the sector and can be a long-term partner.”
“This acquisition represents a rare opportunity to acquire two first class, well operated hotels at an attractive price which we believe will allow us to create long term value for our investors. It is also another important milestone for the Fund as we expand our portfolio into Portugal. We believe strongly in the Algarve’s long-term appeal as a destination for tourism and leisure, and our latest acquisitions are hotels of exceptional quality, in great locations with good access to local amenities, including some of the region’s best golf courses. The Tivoli brand is synonymous with quality and we are pleased to have secured a long-term management contract with MINT and NH Hotels, who we look forward to working with to maintain and further enhance these outstanding hotels.”
Mr. Dillip Rajakarier, CEO of MINT commented: “The transaction reiterates the combined strength of MINT and NHH in the execution of another strategic asset rotation with a respected real estate institutional investor in Europe, following the sale and lease back of the NH Collection Barcelona Gran Hotel Calderón last month. It reinforces yet again our ability to spot a quality asset, make investments to enhance the value, and subsequently realize such value. We are pleased to be able to complete another one of our commitments to our shareholders in strengthening our balance sheet with this milestone in such a challenging time. The transaction further enhances the overall return of the Tivoli portfolio, in addition to the earlier transaction completed in 2019. The transactions generated an overall annual unlevered IRR of high teens for our Tivoli portfolio. Asset rotation continues to be a part of our long-term strategy, and we will continue to look for opportunities to execute this strategy going forward.”
Mr. Dillip Rajakarier also added, “MINT is pleased to be in partnership with Azora as we both share the same vision in having a long-term investment approach and emphasis on value creation for stakeholders.”
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