After several years of challenges related to the global financial crisis, Spain's hotel scene is getting a major boost. Private investment firm Starwood Capital Group is working with hotel investment/asset management firm HI Partners to establish a joint venture to invest in the Spanish hospitality market.
Starwood Capital Group, through a controlled affiliate of Starwood Global Opportunity Fund X, will own 70 percent of the joint venture company, while HI Partners will own the remaining 30 percent. HI Partners—majority-owned by Banc Sabadell, the fifth-largest banking group in Spain—will serve as the manager of the joint venture, which is expected to invest approximately €500 million in the Spanish hotel sector over the next three years.
The joint venture will focus its investment strategy on three- and four-star leisure hotel assets with more than 200 rooms in Spain's primary tourist destinations—including the Balearic Islands, Canary Islands, Costa del Sol, Costa Dorada and Costa Brava. The joint venture will also consider special investment projects in "high-quality" urban hotels in Barcelona and Madrid.
The joint venture with HI Partners highlights Starwood Capital Group's growing presence in Spain, the third-most-popular country in the world in terms of foreign tourist arrivals. "We view the Spanish hotel market as extremely attractive, due to its positive fundamentals, strong demand from both national and international guests and the steady recovery of the broader economy," Keith Evans, VP at Starwood Capital Group, said in a statement.
This is not the first time the Group has partnered with a major Spanish brand: In June 2015, Starwood Capital Group and Spanish hotel operator Meliá Hotels International completed a joint venture to acquire a collection of hotels across key resort locations in Spain. The initial portfolio for the joint venture consisted of seven beachfront hotels comprising 2,933 keys. Starwood Capital Group has acquired more than $77 billion of real estate assets globally since its inception, including approximately 2,600 hotels and resorts.
Completion of the joint venture agreement is subject to the approval of the European Union Merger Control Office.