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Mexican Hotel Operator Grupo Hotelero Santa Fe Acquires Property to Expand Hilton Puerto Vallarta Hotel.

MANews-(C)2009-2016

27 October 2016 - Mexican hotel operator Grupo Hotelero Santa Fe, S.A.B. de C.V. (BMV: HOTEL) has acquired real estate properties consisting of 54 units for hotel-only purposes, as well as an undeveloped land lot of 1,043 square meters, which currently comprise 162 hotel suites, located in usable area of approximately 15,100 square meters, and is adjacent to the Hilton Puerto Vallarta hotel, the company said.

The transaction represented an investment of USD 12m (MXN 224m). The company expects an additional investment of Ps. 296.0 m for this project for a total amount of MXN 520m.

Given that the acquisition would consist of the expansion of an existing hotel, the company expects to achieve operating efficiencies as well as economies of scale that will result in profit and margin increases. The anticipated opening date of the expansion project is 4Q17.

The target properties of the acquisition were previously owned by Promotora TurA-stica Mexicana, S.A. de C.V., which is the current owner of Krystal Puerto Vallarta hotel, and is considered a related entity to the company.

Due to the aforementioned, the transaction was reviewed and recommended by the corporate practices committee, the audit committee and, subsequently, the company's board of directors unanimously decided to approve the transaction during the 20 October 2016 meeting.

Notably, three valuations were undertaken by separate subject matter expert firms, and these were reviewed by the aforesaid corporate bodies.

The company expects to renovate the existing 162 suites and develop 30 additional suites for a total of 192 luxury suites, in addition to banquet rooms, restaurants, bars and complementary services, under the Hilton brand.

With this expansion, the Hilton Puerto Vallarta hotel would increase the number of rooms and luxury suites from 259 to 451, under the all-inclusive Grand Tourism category.

With this acquisition, HOTEL would reach 709 rooms in Puerto Vallarta, which is one of the main tourist destination areas in Mexico, with a total portfolio of 5,052 rooms.

This fact considers that the 162 suites will be excluded from the current room stock of the Krystal Puerto Vallarta hotel, which is currently operated by the company.

Country: Mexico

Sector: Hotels/Restaurants/Casinos/Catering

Target: 54 units for hotel-only purposes, undeveloped land lot which currently comprise 162 hotel suites

Buyer: Grupo Hotelero Santa Fe

Vendor:

Deal size in USD: 12m

Type: Corporate Acquisition

Financing: Cash

Status: Closed

Buyer advisor: , ,

Comment:

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Publication:M & A Navigator
Date:Oct 27, 2016
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