How AXA IM Alts is tapping into local expertise to ensure success

“The Iberian Peninsula is a very deep market,” says Esther Escapa, head of real estate transactions & development Iberia, at AXA IM Alts. “The fundamentals of Spain for hospitality investment remain strong as we look ahead.”

Five-star purchase

AXA IM Alts made a notable hospitality investment in Spain in 2023, acquiring the five-star Hotel Sofia in Barcelona in a joint venture partnership with Blasson Property Investments for around €175 million. The recently renovated property “doesn’t represent a huge challenge from an ESG perspective”, Escapa notes. “It was fully refurbished three years ago, so even if we will put in place a number of ESG-related actions, we are starting from quite a good baseline.”

The property will be upgraded to become the Grand Hyatt Barcelona from its current branding under Hyatt’s Unbound Collection franchise. Says Escapa: “We already have the Hilton Barcelona under management in the city which has a similar number of rooms. We have a strong, internal team specialising in hospitality, so we are well positioned to understand the dynamics of these types of hotels, that perform well from both a business and leisure perspective.”

JV knowledge

On top of that, AXA IM Alts can benefit from the expertise of operating partner Blasson Property Investments on this property. “Investing in joint venture with Blasson is a good way of putting together local expertise with our own internal experience. They have been successful at repositioning high-end hotels in the past and are expert in the food and beverage (F&B) area. This asset has a very significant F&B component, so this is an important angle.”

AXA IM Alts and Blasson acquired the property from Brookfield’s fully owned Spanish hotels arm, Salenta Hospitality Group. The deal boosts AXA IM Alt’s portfolio of hotels in the Iberian Peninsula, which also includes the Barcelona Hilton, the Room Mate Macarena and the four-star Lisbon Lux. Says Escapa: “Hotel profitability has shown resilience, and at  AXA IM Alts we approach the market through our local teams, looking to find investment opportunities for our clients that suit a range of risk-return appetites.”

Geographical spread

Escapa’s team covers Spain, Portugal and Italy for developments, and Spain and Portugal on the transactions side. She notes: “We travel a good deal and consider all the main markets, which are Barcelona, Madrid, Costa del Sol and the Balearic Islands.  In Portugal, we mostly look at Lisbon and Porto. We consider core and value add properties.” in her opinion, there is still much to be done in the region. “Take a market like Palma de Mallorca, which has a huge number of beds and a significantly under-managed stock. Most hotels are family run and often unbranded, beds are heavily distributed through tour operators, and there is a lot of room for improvement.”

She adds: “When a location is taken over and properly managed, the brand also benefits. We have seen that a lot in Madrid and Barcelona. They said that average daily rates (ADR) would never exceed €500 in Madrid. Well, now there are four hotels with ADR exceeding €1,000. On the investment side, capital likes what it sees and will continue to target the region.”