Fattal Hotels raising more funds to develop its European portfolio

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Published on 22/04/22 - Updated on 22/04/22

Raising funds Fattal Group

Fattal Hotels has completed a €315 million fund raise for the purchase of new hotels in Europe in the coming year.

Any future hotels purchased from this fund will be managed by the Fattal Hotels group and its brands such as Leonardo, Herods and NYX. Menora Mivtachim and Harel Insurance will each take €100 million positions in the fund, Leumi Partners will invest €15 million and Fattal Properties will invest the remaining €100 million. The venture may grow to approximately €400 million in next months or years.

The funds will constitute the initial capital for the purchase of hotels in Europe totaling future purchases and investments of more than €1 billion. Two recent purchases by Fattal Europe in Spain, in Malaga and Mallorca, at an approximate cost of €40 million will transfer to the fund. In March Fattal Hotels sold two of its hotels in Munich, the Leonardo Hotel Munich City West and the Leonardo Hotel & Residence Munich for a combined sale price of €77 million.

Fattal’s management company in Germany, Sunflower Management GmbH & Co., signed a lease agreement with the buyers for 25 years for €2.52 million annually for Leonardo Hotel & Residence Munich and €930,000 for Leonardo Hotel Munich City West. Both properties will undergo renovations, with €4 million of the sale price set to be spent on refurbishments.

In addition, Jurys Inn, the Irish hotel chain across Ireland and the United Kingdom, will be rebranded as Leonardo hotels later this year as part of a wider expansion plan. All 35 hotels in the portfolio were acquired in 2017 by the Fattal Hotel Group and will soon join the Leonardo brand which represent 145 hotels across 13 countries, including 16 in Ireland and the United Kingdom.

The capital of the subsidiary, which owns over 50 properties in Europe, was about €185 million when the bonds were first issued. In 2016 and as of the end of 2021, the capital stood at about €356 million, which reflects an increase in value of about 120%.

This is not the first venture that the Fattal Group has set up with capital partners. In 2007, Fattal established a hotel fund with Menora Mivtachim, Migdal Insurance, Amitim, Delek Group and Liberty Properties to purchase hotels. The group purchased 18 hotels in Europe over the years, and when the fund reached its end in 2014, Fattal acquired the hotels from its partners at a cumulative value of about €160 million.

In addition, in July 2021, Fattal acquired 50% of a property company which owns four hotels in central London. Under the deal, Fattal transferred £52 million to the property company capital for the partial repayment of the loans and capital investments. 

The pandemic created opportunities in Europe for the purchase of hotel properties at attractive prices. To this end, we decided to raise the money together with leading partners in the world of finance in Israel, who saw our extensive knowledge and reputation in the field as an opportunity that is expected to bring them a return on their investment. […] We estimate that additional opportunities will be created in 2022 by hotel owners who will have to refinance loans previously taken from banks and may run into a financing challenge. The purpose of the project is to yield a return for investors, similar to what was achieved with the Fattal Group in the previous fund. 

Shahar Aka, Director and CFO of Fattal Group

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