The Hotel Ritz In Madrid Sells For 125 Million Euros - Second Major Transaction In Spain - Highlights Continued Interest In European Hotel Investment
LONDON, The Hotel Ritz in Madrid has been sold for €125 million (approximately US$137.9 million) by Jones Lang LaSalle Hotels, acting on behalf of Le Méridien Hotels and Resorts. The prestigious 167-room property has been acquired in a 50/50 joint venture between Orient-Express Hotels and Omega Capital, a major Spanish investment company. Orient-Express Hotels will operate the hotel under a long-term management contract.
Omega, which has been looking to acquire a hotel in Madrid for some years, said that it sees the Ritz as a very important asset in their real estate portfolio, which includes commercial space, offices and hotel properties in the USA and some European countries. The acquisition goes to support the increasingly widespread recognition of hotels as a mainstream investment asset class.
Transaction volume in Spain in the year to date has already surpassed the total volume in 2002, following the sale of Le Méridien Barcelona to the German open-ended fund DEKA Immobilien Investment Gmbh in January. Jones Lang LaSalle Hotels again acted on behalf of Le Méridien. These sales demonstrate the ongoing interest of investors in assets with a strong track record in prime locations.
"The fragmented nature of the Spanish hotel market suggests that there may be further opportunities for brand consolidation and investment in 2003 if the independent owner-operators choose to dispose of any of their assets," says Jordi Frigola, Senior Vice President of Jones Lang LaSalle Hotels in Spain. "But future activity will depend on the availability of attractive product to buy - there is certainly no shortage of money for investment. This is likely to continue for as long as the stock markets are performing badly."
"The Spanish hotel market is relatively opaque and has previously been dominated by domestic investors and operators. Recent strong interest from foreign investors, banks and operators looking to expand their southern European representation has resulted from the strong trading performance of Spanish hotels over the past few years," says Robert Seabrook, Executive Vice President, Jones Lang LaSalle Hotels, who worked on both deals.
According to Jones Lang LaSalle Hotels' soon-to-be-released European Digest, Barcelona's hotel market was one of Europe's best performers in terms of room yields in 2002, while Madrid performed above the European average. Future trading in these markets will depend on their ability to absorb the additional supply expected in the medium term, itself dependent on the recovery of international demand. Investor demand is nevertheless likely to remain strong in the short to medium term given the strength of the Spanish economy and its importance as a visitor destination.