Blackstone Group has sold a stake in the Spanish hotel group Hotel Investment Partners, to Singaporean sovereign fund GIC. This will allow for expansion of the business at a time where borrowing costs are on the rise.
GIC is acquiring a 35 percent stake in HIP in a deal valued at over €4bn.
In a rising interest rate environment, real estate investors have seen their borrowing costs rise. Canary Wharf raised £300mn last week to fund its expansion.
James Seppala is Blackstone’s European head of real estate.
He said that due to the uncertainty of the economic outlook, it would be prudent to reduce leverage levels in businesses owned by Blackstone.
Seppala stated, “We feel that in this environment it is better.”
In this year, the impact of rising interest rates on financing costs of takeovers combined with economic uncertainty has had a significant impact on dealmaking. Some regulators have warned of the possible impact of sectors like real estate.
GIC’s latest investment in the European hotel industry is the acquisition of a stake. Investors bet that high-end destinations will withstand fears of a consumer spending slump due to inflation.
Blackstone acquired HIP from Banco Sabadell in 2017, two years after its founding, and has since overseen an explosive expansion. Blackstone, which purchases hotels in southern Europe, refurbishes them, and then leases them to hotel operators such as Ritz-Carlton Hilton Marriott, has increased its portfolio by more than fivefold since 2017.
Now, it has 73 hotels in the Canary Islands and Balearic Islands as well as in Italy, Greece, Portugal, and Greece. A new all-inclusive hotel in Mallorca is among the recent openings.
Alejandro Hernandez Puertolas said that the deal is a “further show of confidence” in HIP. . . The resort hospitality sector of Europe” has seen revenue for the remainder of the year increase by more than 20% compared to a year earlier.
GIC has increased its investments in the real estate industry. As of March of this year, real estate assets accounted for about 13 percent of GIC’s total assets. This is up from 10 percent a year ago.
GIC announced earlier this year that it would be partnering with BlackRock, the British Airways Pension Scheme and British Airways to invest in an extensive mixed-use project in London’s King’s Cross area.
In the year prior, the sovereign fund had purchased a majority share in the Mediterranean luxury resort operator Sani/Ikos Group for €2.3bn. This was one of the biggest deals made by a European hotel chain since the Covid-19 Pandemic.
It also bought stakes at two university accommodation providers and the Paddington Office Estate in London. GIC was one of the interested parties in purchasing UK holiday company Center Parcs earlier this year from Brookfield.
Blackstone is actively investing in European Real Estate in 2023.
Blackstone’s president Jon Gray stated in a recent earnings conference that “more than half of our real estate investment activity this year was in Europe due to the greater dislocation and increased pressure on sellers” in the region.
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