Prior to the COVID crisis, Spain was one of the world’s fastest-growing hotel markets, fuelled by economic growth and increasing tourism demand. Transaction activity is now resuming slowly and Madrid starts attracting the attention of investors and brands again. The city’s hotel market has traditionally been driven by being the country’s political, administration, business and higher education centre, rather than by the leisure market. A number of transactions have been announced since the beginning of the year, both hotel acquisitions and conversions from other asset classes.
Commerz Real office conversion
Dirk Schuldes, Global Head of Hospitality at German investor Commerz Real, is positive about opportunities in the Spanish capital: “Not only is Madrid becoming ever more popular with tourists and business travellers, it is also profiting from a relatively constant number of guests across the whole year. Thus a consistently high capacity utilisation is guaranteed”.
Commerz Real has acquired an office building at Madrid Airport with the intention to convert it into a two-star 280-rooms hotel branded by Zleep Hotels. The hotel will be operated as by a subsidiary of Steigenberger Hotels AG.
This is the first investment for the “Commerz Real European Hotel Fund” managed in cooperation with Deutsche Hospitality (Steigenberger’s parent company). The property was acquired from Spanish company Inmobiliaria Valtiendos, S.L. for an undisclosed price. The conversion is led by Spanish project developer Ridasame and will include a restaurant, a lobby, a fitness area and a car park as well as the hotel rooms.
Platinum Estates Housing Project Conversion
Hong Kong investment group Platinum Estates has completed the renovation of the Calle Zorrilla, 19 building it bought in 2015 for 15 million euros. The company’s original plan was to convert the building from a hotel into luxury residential properties, but it is now planning to turn it into a four-star hotel with 75 rooms. However it is rumoured to not rule out its sale.
Archer’s acquisition of Edition Madrid
Archer Hotel Capital announced the acquisition of the 200-room Madrid EDITION. The development is being overseen by KKH Property Investors under a development services agreement. The Marriott brand property is scheduled to open in December 2021, after delays caused by the COVID crisis.
Dominic Seyrling, Director, Investments for Archer Hotel Capital says "We are pleased to complete the transaction for the Madrid EDITION on an accelerated basis and are now eagerly looking forward to the hotel’s opening. This revised transaction is a creative solution amidst the ongoing pandemic and represents a win-win for both buyer and seller”.
Hotel Único Madrid sold to A&G
A&G Private Banking has acquired five-star luxury boutique Hotel Único Madrid from owner-operator Único Hotels for an undisclosed sum. Following the transaction, Único Hotels will continue to operate the hotel under a 20-year lease that includes several buyback options for the operator. The property includes 44 rooms, a library, wellness suite and a range of F&B facilities, including the two Michelin star-rated restaurant Ramón Freixa.
Jorge Ruiz, Head of Hotels, Spain and Portugal at CBRE, who advised on the transaction, says “This transaction highlights the continued interest from investors in the Spanish hotel market despite the pandemic. Hotel Único Madrid has strong fundamentals and offered a rare opportunity to purchase such a well-placed asset. Sale-and-leaseback deals provide an excellent alternative to enable operators to navigate through the Covid crisis whilst retaining the operations of strong performing assets.”