Spanish REIT Hispania, eyeing merger, makes offer to Bay Hotel shareholders

Cristina Garcia-Peri © D.R.

Following its move last year to become the sole owner of Spanish resort group Bay Hotels, Madrid REIT/SOCIMI Hispania is considering a merger or a de-listing of the firm and announced an offer of €7.75 for stock of the remaining small shareholders, just above net asset value.

Hispania over the last year has been transforming itself into a pure Iberian resort hotel group , still intending to dispose of remaining office and residential assets. At year end 2017 it announced the €172.4m acquisition of the remaining 19.5% of Bay from its main operating partner Barceló Group that it did not already own. Hispania simultaneously cemented its position as Spain's largest resort hotel owner by signing a €165m option for seven hotels of the Alua Hotels & Resorts chain on the Balearic and Canary islands.

In a release to Spanish regulator CNMV on Wednesday, Hispania said it has begun the study of available alternatives for Bay that include, "a direct exclusion from this (junior MAB) market or, alternatively, the possibility to merge with Hispania Activos Inmobiliarios SOCIMI, S.A."

The offer to shareholders slightly exceeds the €7.71 per share in an asset valuation made by adviser CBRE which puts Bay total assets at just over €1.13bn in value, with shares outstanding of 92.8m. The offer compares to an average share price of Bay Hotels stock at the start of 2018 of €5.38, which gave it a total market capitalisation of €500m.

Depending on the outcome, particularly the amount of shares acquired and the best interests of shareholders, Hispania said will propose the most suitable alternative to its shareholders meeting to take place by the end of April.

Launched onto the stock market in 2014, Hispania is an externally managed REIT/SOCIMI run by the Madrid Azora group through Hispania General Manager Christina Garcia-Peri.

At the end of the third quarter Hispania reported net profit up to €206m from €156m in the comparable 2016 period, on assets worth €2.60bn. Witthout consolidating Bay, the firm owned hotels 45 hotels with a total of 12,938 keys (rooms).