Henderson Park and Hines have acquired a portfolio of five hotels on Crete, moving into the leisure market after 2017’s Athens hotel purchase.
The pair said that they had been able to “provide a solution to a distressed situation”, as the Greek government was opening the country up.
The purchase was a move away from Henderson Park’s core portfolio of city-centre assets in gateway cities.
The hotels were described as offering “significant potential to create value over the medium and long term through refurbishment, brand repositioning and proactive management”.
Y&T Daskalantonakis Knossian Group, a specialist asset manager of upscale and luxury hotels, has also been instructed by the joint venture as local operating partner, responsible for managing the hotels.
Nick Weber, founding partner, Henderson Park, said: “While the leisure industry has no doubt been temporarily impacted by the COVID-19 crisis, we are firm believers that it will bounce back. With this transaction we have been able to provide a solution to a distressed situation and gain control of a number of high quality, high-potential assets in a globally leading tourist destination at an attractive entry basis.
“Government plans to begin reopening Greece are reaffirming our overall investment thesis and we have strong conviction in the significant repositioning opportunities that have been identified to enhance longer term value.”
Xenophon Petropoulos, country director, Horwath HTL Greece told us: “Crete is one of the top three destinations in Greece, with more than 18% of total nights and Henderson is now everywhere in Crete.”
Commenting on branding in the country, he added: “The majority of hotels in Greece are family-owned businesses. We have a lot of requests from brands looking to collaborate, but at the moment most hotels are white label or national brands, like Grecotel or Sani/Ikos. I feel that this is going to change in four to five years, now that second-generation hotel owners are educated and experience and know that the international brands can give them exposure”.
Thanos Papasavvas, founder & CIO, ABP Invest, added: “Attractive country and sector valuations, continuing search for yield and a desire to put capital to work support Henderson Park’s investment into the Greek tourist industry! As highlighted in the inaugural Hospitality Investor Sentiment Assessment, 80% of participating investors were expecting to be net buyers over the next 12 months.”
In 2017 the pair acquired the Ledra Marriott Hotel in Athens for €33m at auction, bringing Hyatt into after signing a franchise agreement for the first Grand Hyatt in Greece, with Takuya Aoyama, VP, development, Eastern Europe, Russia & CIS, Hyatt, commenting: “We have long sought to bring the Grand Hyatt brand’s celebratory luxury to the Greek capital. This deal represents a significant milestone in Southeast Europe, an important growth market for Hyatt with recent Hyatt development announcements in Turkey and Bulgaria.”
The 1,094-room, c. 67,000 sqm portfolio comprises five seafront hotels in key resort locations across the island, as follows: Hermes and Coral, two adjacent hotels with 218 and 170 rooms respectively, centrally located in the coastal city of Agios Nikolaos; Santa Marina and Apollonia, with 208 and 336 rooms respectively, benefitting from prime seafront locations in Crete’s capital city, Heraklion, which is just 5km from the island’s main international airport and close to world famous archaeological site Knossos; a 162-room resort and spa hotel located in Sitia, a coastal town on the west of the island.
Crete enjoys a longer-than-usual season, running from April through to October, as well as its accessibility with a full ferry schedule and three airports, including the new international airport at Kasteli.
Insight: In case anyone was wondering, this pandemic marks how and why investors such as Henderson Park get into resorts. The company has a number of large, city-centre properties, with strong brands in strong locations which are currently either closed or open on very low occupancies, with not the greatest of prospects of that changing soon.
The company was first drawn to Greece when the country started sorting out its non-performing loans and, in the ensuing clearout, added a site for the good folk at Hyatt. Now Henderson Park and its partner are back in Greece, once again looking to distress, but this time looking to enjoy a bit of the summer.
As we have noted before in these pages, resorts are likely to be the winners out of the pandemic, offering controlled environments, in this case next to the fresh breezes of the sea. Witness last week’s KKR/Roompot deal. Those looking to diversify away from the tainted city are travelling to the seaside, and may take the brands with them, dragging resorts through another evolution.