Blackstone Real Estate Partners Europe has reached an agreement to acquire five Greek hotels from the Mediterranean company Louis Group at a total enterprise value of €178.6 million.
The five hotels are located in the Greek Islands with two in Corfu (Corcyra Beach and Grand Hotel), two in Zante (Zante Beach and Plagos Beach) and one in Crete (Creta Princess).
The portfolio has a total of 1,464 hotel rooms. Completion of the transaction is subject to the customary approval of the relevant antitrust authorities.
The Portfolio
The hotels will continue to be operated by Louis Group under the management of HIP, a hospitality company owned by funds managed by Blackstone. HIP is the largest owner of hotels in Southern Europe and the acquisition expands its footprint to Greece.
Through HIP, Blackstone expects to invest what it is calling "meaningful capital" to renovate and reposition these hotels.
“Greece is a fantastic destination with an incredible history, wonderful weather and meaningfully improving connectivity with the rest of the world,” said James Seppala, head of European real estate at Blackstone. “We are excited to invest here, to help Greece maintain its rightful place as a premier global tourist destination and spur local economic growth.”
Register now for The Mediterranean Resort & Hotel Real Estate Forum (MR&H) in Athens, Greece on October 29-31, 2019. MR&H is the industry’s only dedicated investment and development conference for senior leaders looking for their next opportunity in leisure hospitality.
This transaction, Seppala added, reflects Blackstone's confidence in the Greek investment environment and he hopes to invest further in the country.
“We are very pleased to announce our first investment outside of Spain and, more specifically, in Greece, a country that is globally renowned for its leisure offering and unique locations,” said Alejandro Hernández-Puértolas, CEO and founding partner of HIP. “With this acquisition, we see an opportunity to add value by investing and actively managing the hotel businesses as we have done with the rest of our HIP portfolio.”
Costakis Loizou, chairman of Louis Group, added the upgrades to the hotels would be “a boost for the Greek tourist sector.” The company operates 26 hotels and resorts across Greece and Cyprus.
Greece on the Rise
The transaction comes as more global companies are looking to gain ground across Greece. Earlier this year, Nikki Beach opened its second resort in the country, Kerzner International Holdings and Dolphin Capital Partners broke ground on the One&Only Kéa Island and Wyndham opened the largest convention center in southeastern Europe with the Akti Imperial Hotel & Convention Center, Dolce by Wyndham on Rhodes. Back in May, Thomas Cook's hotel fund, Thomas Cook Hotel Investments, acquired three additional properties, including one of the company’s flagship hotels, the Casa Cook Kos in Marmari, Greece. Mohegan Gaming and Entertainment, meanwhile, is actively pursuing an opportunity to invest in a large integrated entertainment resort in Athens.
In July, Miguel Casas, head of hotel investment properties for continental Europe at CBRE, told Hotel Management he had seen “a massive influx of money” coming into destinations along the Adriatic Sea, including Greece. “[Investors are] still looking to deploy capital there in large amounts,” he said. “This has had a tremendous pressure on cap rates as there’s been much more tension in competitive processes to acquire hotel assets.” He estimates the shift has driven cap rates down 200 basis points in five years, “which is pretty spectacular if you think about where we were five years ago. We are going to see, by the end of the year, some transactions that will see record lows in terms of yield in Greece and the Adriatic," he said.