Davidson Kempner Wins Race For Luxury Hotel Portfolio in Portugal
Main Photo: The Conrad Algarve, one of the hotels included in the deal
Date: December 2021
Name: Nau Hotels – a portfolio of luxury hotels, including the Conrad Algarve, the Cascatas Golf & Resort Spa by Hilton and the NAU group, of La Vie shopping centers, among other real estate assets.
Location: Across Portugal
Number of Keys:
Seller: ECS restructuring funds. Founded in 2006, ECS is a leading private equity and restructuring firm focused on the Portuguese market. ECS currently manages four funds directly in Portugal.
Buyer: In May 2021, the portfolio was down to the final three bids…at that time the investors still in the running were: Davidson Kempner, Bain/Cerberus and Oaktree.
The Davidson Kempner fund won the race to buy a portfolio of luxury hotels, among other real estate assets, from the Portuguese bank, with whom it will now negotiate on an exclusive basis. Behind was the consortium formed by Bain and Cerberus, which also exposed a firm proposal to acquire the restructuring funds of ECS, a company founded by the former governor of the Bank of Portugal António de Sousa and Fernando Esmeraldo, however, it was insufficient to convince the national banks.
The operation was considered the real estate deal of the year in Portugal, and not for nothing. At stake is a portfolio of luxury hotels, including the Conrad Algarve, the Cascatas Golf & Resort Spa by Hilton and the NAU group, of La Vie shopping centers, among other real estate assets. The transaction may be worth around €900 million.
It is expected that the deal will be completed during the first half of next year, and banks and investor will now proceed to exclusive negotiations in the near future. It will be a bank financing that may be higher than 60% of the purchase price. Novobanco, BCP and Caixa Geral de Depósitos are the banks with the largest exposures in this set of assets, with Santander and Oitante also holding participation units in the ECS funds.
The operation is fundamental for financial institutions, as it will allow the balance sheet to be cleaned of non-strategic assets that heavily penalize banks’ capital ratios. However, it remains to be seen what impact the deal will have on the accounts. This is because if the units are sold for less than what the banks have been accounting for in their balance sheets, this will represent additional losses for the banks.
This is not Davidson Kempner’s first deal in Portugal. In 2019, this American fund bought the “Nata 2” portfolio from the bank led by António Ramalho in a deal that proved controversial due to the losses it generated for the Resolution Fund.
Price: Upto €900m
THPT Comment: This race has been going a while…it will be the biggest hotel deal this year in Portugal. Be interesting to see what Davidson Kempner will do with the portfolio…break it up or combine it with their existing hotel holdings?
First Seen: Supercasa
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