Covivio, the pan-European investment firm born out of the fusion between Paris-listed Foncière des Régions and Italy's Beni Stabili, has confirmed the acquisition of a pan-European luxury hotel portfolio for €620 mln.
The firm's subsidiary Covivio Hotels has acquired a portfolio of eight hotels located in Rome, Florence, Venice, Nice, Prague and Budapest for €573 mln from global investment firm Värde Partners.
The group has also announced the acquisition of a 120-room Hilton hotel in Dublin for €45.5 mln, representing a yield of 6.4%. Covivo plans to convert the property's ten meeting rooms into further beds from now to 2021, generating a value creation of nearly 10%. The deal marks its first Irish hotel buy.
The eight hotels in the portfolio deal are mostly classified 5*, and include emblematic properties such as the Palazzo Naiadi in Rome, the Carlo IV in Prague, the Plaza in Nice and the NY Palace in Budapest. The deal is expected to close in the first half of 2020.
Although Covivio is historically present in the Milan office market, the deal marks its debut in Italian hotels. According to the firm, Italy is the third-ranked global destination in terms of overnight stays (429 million recorded in 2018), while its largely independent stock offers plenty of opportunities for further brand penetration.
Totalling 1,115 rooms, these hotels will be operated under the brands NH Collection, NH Hotels and Anantara Hotels & Resorts, the latter being a high-end brand well consolidated in the Asian markets which the NH Hotel Group is currently introducing in Europe.
NH Group partnership
Covivio and NH Hotel Group (part of Minor International) have signed long term triple net leases with minimum guaranteed variable rent. The agreement has an initial duration of 15 years, extendible at NH Hotel Group’s option to 30 years. Covivio is now pursuing a capex programme for the entire portfolio.
Covivio's collaboration with NH Hotel Group began with the acquisition of a hotel in the centre of Amsterdam in 2014, and then continued between 2016 and 2018 with the purchase of ten hotels in Germany, the Netherlands and Spain.
As in 2018 in the United Kingdom, Covivio positioned itself by acquiring a portfolio of operating properties, before selling the businesses and signing long-term leases with its partner.
The price of €573 mln includes capex for a yield target of 5.8%.