Fattal raises more funds to seize opportunities in Europe – HOTELSMag.com

Fattal Hotels has raised 315 million euros ($341.22 million) for the purchase of hotels in Europe, according to Ronen Nissenbaum, new CEO of Tel Aviv-based Fattal Hotels for the Kingdom UK, Ireland, Benelux and Spain. All future hotels purchased from this fund will be managed by Fattal and its brands such as Leonardo, Herods and NYX.
Nissenbaum told HOTELS that Menora Mivtachim and Harel Insurance will each take 100 million euros ($108.32 million) into the fund, Leumi Partners will invest 15 million euros ($16.24 million) and Fattal Properties ( Europe) Ltd. 100 million.

Following interest and requests from other financial institutions, the business could reach around 400 million euros ($433.3 million), Nissenbaum said. The funds will form the initial capital for the purchase of hotels in Europe totaling future purchases and investments of more than one billion euros ($1.08 billion), he added.

Two recent purchases by Fattal Europe in Spain (Malaga and Mallorca) with a total of 260 rooms at an approximate cost of 40 million euros ($43.33 million) will be transferred to the fund.

Earlier this week HOTELS announced that Jurys Inn, the Irish hotel chain across Ireland and the UK, will be rebranding Leonardo hotels later this year as part of a wider expansion plan, which could also include new hotels in Dublin, Cork and Galway. The 35 hotels in the portfolio were acquired in 2017 by the Fattal Hotel Group, owned by Israeli entrepreneur David Fattal. The Jurys brand operated under the aegis of the Fattal group, with its Leonardo, Royal and Nyx properties.

Bar in a Leonardo hotel in Europe

Currently, there are 145 Leonardo properties in 13 countries, including 16 in Ireland and the UK. The company said the rebranding will allow customers to access benefits such as the international loyalty program and employees to work abroad within the group.

In mid-March, Fattal Hotels sold two of its hotels in Munich: the 98-room Leonardo Hotel Munich City West and the 270-room Leonardo Hotel & Residence Munich for a combined sales price of 77 million euros (92 millions of dollars). €209,000 per room ($250,000). Additionally, Fattal’s management company in Germany, Sunflower Management GmbH & Co., has signed a lease agreement with the buyers for 25 years for 2.52 million euros ($3 million) per year for the Leonardo. Hotel & Residence Munich and €0.93 million ($1.1 million) for the Leonardo Hotel Munich City West. Both properties will undergo renovations, with 4 million euros ($4.7 million) of the sale price to be spent on renovations.

“The pandemic has created opportunities in Europe for the purchase of hotel properties at attractive prices,” said Shahar Aka, Director and Chief Financial Officer of Fattal Group. “To this end, we have decided to raise funds with leading partners in the world of finance in Israel, who have seen our vast knowledge and reputation in the field as an opportunity that should bring them a return on their investment.

Aka added that Fattal’s management has been exposed in recent months to many opportunities on the continent. “We believe additional opportunities will be created in 2022 by hotel owners who will need to refinance loans previously taken out with banks and may face a funding challenge,” he added. “The aim of the project is to generate a return for investors, similar to what was achieved with the Fattal group in the previous fund.”

The capital of the subsidiary, which owns more than 50 properties in Europe, was approximately 185 million euros (200.4 million dollars) when the bonds were first issued (Series A) In 2016 and at the end of 2021, capital was approximately €356 million ($385.63 million), reflecting an increase in value of approximately 120%, with no additional cash flow to the subsidiary from the owners and after withdrawal of a dividend of 49 million euros ($53.07 million) in 2021.

“We have proven that we know how to improve the assets we have in Israel and abroad, increase revenue and create increased value for our hotel assets.” – Ronen Nissenbaum

Nissenbaum added that Fattal Hotels is now considered one of the most important operators in Europe and the largest in Germany. “We have proven that we know how to improve the assets we have in Israel and abroad, increase revenue and create increased value for our hotel assets,” Nissenbaum said.

This isn’t the first venture the Fattal Group is setting up with financial partners, according to Nissenbaum. In 2007, during the financial crisis triggered by the failure of Lehman Brothers, Fattal set up a hotel fund with Menora Mivtachim, Migdal Insurance, Amitim, Delek Group and Liberty Properties to buy hotels. Fattal, who was the fund’s biggest investor, bought 18 hotels in Europe over the years, and when the fund reached its end in 2014, Fattal acquired its partners’ hotels for a cumulative value of around 160 million. euros.

In addition, in July 2021, Fattal acquired 50% of a property owner of four hotels (including around 1,350 rooms) in central London. As part of the deal, Fattal transferred £52 million ($67.82 million) to the capital of the property company for partial repayment of loans and capital investments, Nissenbaum said. Fattal acquired 50% of the real estate company in exchange for a rent discount for the next three years. Leumi Partners and Deloitte participated in the formulation of the agreement and its main economic outlines.

Fattal Hotels, owned by the Fattal family (62.33%), was established by David Fattal in March 1998 and specializes in owned, operated, leased and managed hotels in Israel and Europe. The network currently has around 45,000 rooms in 230 hotels (including hotels under construction) in 19 countries. The company operates under the Leonardo, Herods and NYX brands.

Fattal has 173 hotels in Europe (including hotels under construction) with the greatest concentration in Germany, where it has 71 hotels. In the UK (including Ireland), Fattal is considered the second largest hotel company with some 52 hotels.

Mary I. Bruner