Investment funds lining up purchases of hotels in Mallorca

A KKR investment fund hotel property.

Majorca Daily Bulletin reporterPalma26/09/2020 11:13

Investment fund sources suggest that some 5,000 million euros will be allocated to acquiring assets owned by Majorcan hotel chains in the Balearics, on the mainland, in other parts of the Mediterranean and in the Caribbean.

The financial situation of many companies is described as "delicate", and so they are being forced to sell assets in order to stave off potential bankruptcy. As a consequence, investment funds are in a position to set prices, with assets said to have depreciated by up to 60% compared to a year ago.

Purchase operations are expected to be carried out at the end of this year and during the first quarter of 2021. Hotel companies' lack of liquidity will mean that the sale prices will tumble.

The Blackstone Group through its Hotel Investment Partners subsidiary is said to be lining up around 3,500 million euros. It is a good time to acquire refurbished four and five-star assets that are well-positioned and can be easily marketed once the crisis passes.

The season was always destined to be poor, but it obviously took a turn for the worse once travel restrictions were reintroduced, e.g. the UK quarantine requirement. As a result, this further weakened hotel groups' financial situations.