Principal’s Hotelfund II buys the Ona Hotel Terra in Barcelona for €40.5M

On behalf of the Principal Hotel Real Estate Fund II ( “Hotelfund II” ) Principal Real Estate Europe, confirms the closing of the acquisition of the Ona Hotel Terra in Barcelona for € 40.50 million from a local real estate developer. The 3* hotel has 152 rooms, a restaurant, a bar, 2 meeting rooms as well as a rooftop terrace with swimming pool offering exceptional views over Plaza de España and Palace of Montjuic. As part of the transaction a long-term lease was entered into with Ona Hotels, a family owned Spanish hotel group based in Barcelona which operates 40 hotels in 4 countries (Spain, Andorra, Morocco and Tunisia) with ca. 5,500 rooms.

This acquisition reflects the value-add strategy of Hotelfund II to focus on strategically located, high quality 3-5* hotels in major cities across Europe with significant potential to increase value. Accordingly this hotel, was secured for the Hotelfund II by PRINCIPAL in a forward purchase contract whilst still under construction as it is one of the last hotels to receive a building permit before the hotel development moratorium in Barcelona and is ideally located in the centre of Barcelona next to the convention centre “La Fira” in a pedestrianised street just behind Plaza de España. PRINCIPAL therefore acquired the hotel once construction completed and the brand new hotel opened on the 17^th of January 2020. Going forward Principal expects good performance and value enhancement of this asset as it benefits from the strong general hotel market development in Barcelona throughout 2019 and beyond, the normal ramp up in trading of a newly opened hotel, dynamic lease structure and high-quality characteristics of this hotel real estate asset; all in line with Hotelfund II’s investment strategy.

After the successful sale of the hotel portfolio in the Principal Hotel Immobilien Spezialfonds (“ Hotelfund I”) as reported this is a significant step by PRINCIPAL on the acquisition front. Indeed this is the second hotel PRINCIPAL has acquired on behalf of Hotelfund II and follows the signing of significant additional equity of over €100 million bringing the total subscribed equity of Hotelfund II to €245 million. All investors in Hotelfund II which were invested in Hotelfund I subscribed this additional equity after the disposals of Hotelfund I which significantly exceeded target returns of this first Principal’s hotel real estate fund launched in 2012.

Jochen Schaefer-Suren, CEO of Principal’s Hotel and Leisure division, commented: “ The Ona Hotel Terra in Barcelona is an exciting investment for our Hotelfund II as it is a very attractive value-add opportunity in particular as the hotel development moratorium in Barcelona should constrain supply and provide a unique opportunity to benefit from future demand growth to all existing hotels including our new hotel in Barcelona. It is a perfect illustration of the type of value add hotel investments Principal is looking for after the successful sale of the hotel portfolio in Hotelfund I, led all but of one of our investors in Principal hotel fund II to give us this further vote of confidence with over €100 million additional equity. This allows us to look for further hotel investment for Hotelfund II of over €400 million in 2020 and beyond”