The Olayan Group, an investment group from Saudi Arabia, has acquired the Mandarin hotel in Barcelona from the Reig family for an amount exceeding 220 million euros. Sources from the JLL consultancy, which has advised the Andorran group, explained that the hotel, located on Passeig de Gràcia, has established itself as an “emblematic establishment in Spain and a first-rate destination in the city”, since it opened in 2010 and several investment groups have been vying to buy it.
The Mandarin hotel is a five-star establishment of great luxury, which has 120 rooms, a 1,000 m2 spa, a rooftop pool with spectacular views of the city of Barcelona and another indoor pool, the Moments restaurant by Carme Ruscalleda and 2,000 m2 of commercial space with brands such as Philipp Plein. The rooms and suites have been designed by the interior designer Patricia Urquiola, and in the agreement they are valued at more than 2 million euros each.
The Olayan Group, advised by Savills in the operation, already participates as an investor with the Mandarin group in the Ritz hotel in Madrid, an establishment they jointly acquired in 2015 for 130 million euros and in which they have invested 90 million more to renew it.
Patrick Saade, director of investments in the hotel area of ??the JLL consultancy, highlighted the brand and the good location of the hotel as the key to the high price at which the operation was closed. “Investors have shown a great desire for the asset despite the difficult environment in the capital market”, due to the rise in interest rates, the manager pointed out.
The sale has, in fact, been led by the Farallon fund, which in 2020 acquired at a discount the debt of 445 million euros that Reig had assumed with CaixaBank for various operations, in addition to the purchase and rehabilitation of the property , which had been the former Catalan headquarters of Banco Hispano Americano.
Reig and Farallon had tried to sell the hotel before, the last time in 2020, but the high price and the impact of the pandemic drove investors away. Now the situation has taken a 180 degree turn. Barcelona, ??points out the consultancy, has seen a great recovery in its hotel market which already exceeds pre-pandemic levels. So, last year the average daily rates for accommodation in the city were 11% higher than in 2019, according to STR data.
This element has been advocated by owners so far to convince buyers. Barcelona has few hotels with Mandarin standards, in the super luxury range, and its average rate already exceeds 800 euros per night, according to market sources. The penthouse suite can reach 12,000 euros per night.
There is the circumstance that the 22 suites of the Mandarin, the most profitable and requested rooms, are owned by the owner of Mango, Isak Andic, through his company Punta Na. Andic and María Reig reached an agreement in 2014 to join the hotel on the upper floors of the neighboring building, former headquarters of Banco Sabadell, while keeping the flagship store of the Mango group in Barcelona downstairs. Business sources explained that the rental contract had an initial duration of 25 years, which has been extended. The suites have not been sold and remain in the hands of Andic, while the rental contract is maintained.
Reig Capital emphasized that since its opening in 2010, the Mandarin has contributed to positioning the luxury and premium hotel sector in Spain, and especially in Barcelona, ??”at the highest level”. According to Reig, in 2022 the hotel obtained the best operational results since it opened, with profits that real estate sources estimate at more than nine million euros and which could reach 12 million annually in two years.
