New Bidder Emerges for Sotogrande

A new suitor is circling Sotogrande SA, the real estate unit of Spanish hotel company NH Hoteles SA, according to media reports.

NH Hotels is marketing the real estate operation as part of a move to divest assets, restructure debt, and focus on its core business. U.S.-based Oaktree Capital Group LLC and Cerberus Capital Management LP are among the bidders for the unit, which primarily controls a residential development, golf courses and developable land in southwest Spain, Bloomberg reported last month.

Now Axa Real Estate, the real estate division of Axa, the French insurance company, has joined the fray, according to reports in the Spanish media. Real estate consultants CB Richard Ellis are reportedly advising AXA on the deal, which could have a value of around €200 million, according to the Spanish financial daily Expansión.

The reports are short on detail, and NH is still refusing to confirm information about the sale process, other than to acknowledge that Sotogrande is, in fact, for sale.

“With respect to Sotogrande, and up to the present date, the company has not received any binding offers,” the company said in a memo to the CNMV, Spain’s stock market regulator.

But clearly Sotogrande’s assets are attracting international attention. In a recent investor presentation, NH spotlighted the “hidden value” of Sotogrande’s portfolio, including 420 hectares of land in Spain with more than 630,000 square meters of buildable area. Sotogrande also has interests in golf courses and land in Mexico and the Dominican Republic.

NH estimated the book value of Sotogrande at €223 million, but also noted debt of €105 million. The hotelier controls 98 percent of Sotogrande.

The high-level interest in Sotogrande is the latest example of the growing enthusiasm toward Spanish property by international funds, which are pursuing different levels of the depressed market. In addition to buying distressed residential property, funds have been targeting real estate service operations and real estate investment trusts.

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