The Olayan Group, an investment group from Saudi Arabia, has acquired the Mandarin Hotel in Barcelona from the Reig family for more than 220 million euros.
Sources from the JLL consultancy, which has advised the Andorran group, explained that the hotel, located on Paseo de Gràcia, has established itself as an "emblematic establishment in Spain and a first-class destination in the city" since its inauguration in 2010. and several investor groups have disputed its purchase.
The Mandarin hotel is a five-star luxury establishment, 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 area 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 that they jointly acquired for 130 million euros and in which it has invested an additional 90 million in its renovation.
Patrick Saade, investment director of the hotel area of the JLL consultancy, highlighted the brand and good location of the hotel as keys to the high price at which the operation has been closed. "Investors have shown great appetite for the asset despite the difficult environment in the capital market" due to the rise in interest rates, said the manager.
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, the former Catalan headquarters of the Bank Hispanic American.
Reig and Farallon had tried to sell the hotel before, most recently in 2020, but the high price and the impact of the pandemic scared off investors. Now the situation has turned 180 degrees. Barcelona, says the consultant, has seen a great recovery in its hotel market that already exceeds pre-pandemic levels. Thus, last year the average daily rates of accommodation in the city were 11% higher than in 2019, according to STR data.
This element has been defended by the owners until now to convince the buyers. Barcelona has few hotels with Mandarin standards, in the super-luxury range, and their average rate is already over 800 euros per night, according to market sources. The penthouse suite (a duplex penthouse) can reach 12,000 euros.
It so happens that the 22 Mandarin suites, the most profitable and sought after, are owned by the owner of Mango, Isak Andic, through his company Punta Na. Andic and María Reig reached an agreement in 2014 after adding the adjoining building, the former headquarters of Sabadell, to the hotel establishment, owned by the businessman. Between the two they invested 20 million euros to build the rooms, with a rental contract for a period of 25 years. The suites have not been sold and remain in the hands of Andic, while the rental agreement remains in force.
Reig Capital highlighted 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, the hotel obtained in 2022 the best operational results since its opening, with profits that real estate sources estimate at more than 9 million euros and that could reach 12 in two years.
