NH Hotel Group is to operate eight former Boscolo sites on behalf of Covivio in Europe under long-term variable lease agreements.
The hotels include the Palazzo Naiadi in Rome, the Carlo IV in Prague, the Plaza in Nice and the NY Palace in Budapest and will be rebranded under the Anantara Hotels & Resorts, HN Hotels and NH Collection brands.
Covivio acquired the Boscolo Hotels portfolio at the end of last year and will undertake an extensive repositioning programme in all the properties in the coming months. The handover of the hotels will take place by the end of the first half, with the exception of the hotels in Florence and Nice, which are currently under a full refurbishment and will join NH by June 2020 and January 2021 respectively.
Värde Partners confirmed what sources close to this publication mooted last month: that the deal had an enterprise value of €600m. Värde Partners took control of Boscolo’s hotels in April 2017 after a series of deals to acquire the group’s debt, thought to have cost a total of €450m. It is our understanding that the exit was earlier than planned for the group, driven by a buoyant transactions market for luxury hotels.
“At the time we acquired the business it was in severe financial difficulty and facing an uncertain future,” said Francisco Milone, partner & head of European Real Estate at Värde Partners. “Having appointed a best-in-class management team, together we have rebuilt trust with the company’s financial partners allowing us to refinance the business and execute an ambitious investment programme. Our real estate investment strategy targets opportunistic and value-add investments across commercial and residential markets, and we continue to explore opportunities in the Italian market.”
NH said that the agreement would “consolidate its commitment to the luxury hotel segment while reinforcing its leadership in Italy and boosting its prominent position in competitive markets of France and Eastern Europe”. The portfolio adds 1,115 rooms.
The pair have agreed a long-term sustainable lease contract under which NH will pay variable rent with minimum guaranteed, including a shortfall cap mechanism. The agreement has an initial duration of 15 years, extendible at NH’s option to a period of not less than 15 years.
Ramón Aragonés, CEO, NH, said: “Following our integration with Minor Hotels, this transaction represents an extremely important milestone in our shared ambition to continue to expand the luxury brand Anantara Hotels, Resorts & Spas in Europe, while marking significant progress on our strategy of creating added value for NH Collection´s customer base via new hotels and destinations.
“This agreement reinforces the collaboration between Covivio and NH Hotel Group, which dates back to 2014 and has since unlocked advantageous deals for both parties in the Netherlands and Germany”.
The sale of the former Boscolo portfolio was in keeping with growth in the transactions market in Italy, traditionally a difficult market for overseas investors to access. According to a study by CBRE Hotels, Italy was the third most invested European hotel market in the year to Q3, aided by the Belmond sale and the acquisition of a 15-hotel portfolio by Oaktree. The broker said: “Active institutional buyers are reinforcing the shift of the Italian hotel market from opportunistic to core.”
Värde Partners appointed Stephen Alden, former CEO of the Maybourne Hotel Group, to lead the portfolio in August 2017, with the hotels relaunched in 2018 as The Dedica Anthology amidst plans for a €100m renovation programme. Blackstone Real Estate Debt Strategies provided a €337m loan to Värde Partners at the end of last year to help fund the refurbishments and refinance loans. It was not clear at this time whether the brand would be retained.
Commenting on the name, the group said: “Our brand name is composed of two parts. The Italian word 'dedica' (deriving from the Latin dedicare: to dedicate) implies devoting one's time to a particular purpose or assigning a work of art in someone's honour – reflecting the sense of curation that is an intrinsic part of the brand, along with its focus on millennial-minded guests. As a noun, a 'dedica' is the handwritten, bespoke note that an author will pen on a book for a particular reader.
“We draw from this our dedication to making a personal difference to a guest's experience of a city. The choice of 'anthology' as a companion describes the collection of unique stories represented by each of our hotels and their guests.”
It maintained the distribution agreement signed with Marriott International which brought the hotels under the Autograph Collection flag.
Following the sale to Covivio, Alden said: “The luxury hotel industry is changing rapidly in response to evolving customer preferences and increasing demand from travellers with a more millennial mind-set. Our investment strategy, including a major renovation programme across the portfolio, is designed to capture the full potential of our collection of iconic hotels. We have enjoyed an excellent relationship with Värde Partners and look forward to the future as the portfolio embarks on an exciting new phase of its journey.”
Insight: And so long The Dedica Anthology, one of the shortest-lived brand names there ever there was. Proof, as if it was needed, that a flag - or attempts to build one - is never going to get in the way of a lively transactions market.
It also bears witness to the very softness of the soft brands, with Marriott International also losing out some very lovely members of the Autograph Collection and in Italy too, one of the most sought after of the luxury markets, as anyone who enjoyed the Belmond deal - and who was involved in this one - can attest all the way to the bank.
To the winner the spoils, with NH and Minor making out like luxury bandits on this deal, with more than a thousand rooms laced with gold and marble to add to their estate. Minor spoke last year of the importance of the Anantara brand to its expansion strategy, which has helped its mixed-used business grow with the help of a dollop of luxury residential villas. Just what the rapidly-expanding hotel group in your life needs as it looks to global domination.
The deal is also vindication of Minor’s acquisition of NH Hotel Group. The Anantara Hotels & Resorts brand hails from Minor, but it is being delivered courtesy of Covivio’s long relationship with NH and NH’s management have been duly rewarded with overseeing it. The deal comes less than a year after the launch of the Anantara brand in Spain, with the pair jointly operating the Villa Padierna Palace in Marbella.
NH is now able to go it alone. Given the company’s strength in Latin America, we can expect the brand to travel further and with it NH’s luxury reputation.