US private equity firm Blackstone eyes hotels in Rhodes

Private equity firm Blackstone has its eye on buying two hotels on the island of Rhodes as part of plans to expand its presence in Greece's hospitality industry ahead of the summer season.

The hotels, Amillia Mare and Paradise Village have a total number of 1,600 beds and had been purchased two years ago by US investment fund H.I.G. Capital, that some $35 billion under its management.

H.I.G. had bought the hotels from Tourist Enterprises of South SA (TEN SA) for about 70 million euros, of which more than 50 million euros related to loans held by the hotel units.
 
Sources told Business Daily that HIG has not decided to put the hotels up for sale though it may consider selling if the price offer is high enough to secure a satisfactory rate of return on the investment. On the other side, the company has put together a development plan for the two hotel units in Rhodes, boosting confidence in their growth potential.

Blackstone is moving to boost its presence in the hotel business, by pushing ahead with a 500 million euro investment program. The start took place when it purchased five hotels from Cyprus' Louis group in September for 180 million euros. These deals were conducted via Blackstone Real Estate Partners in Europe and related to two hotels in Zakynthos (Zante Beach and Plagos Beach), two in Corfu (Corcyra and Grand Hotel) and one more in Crete (Creta Princess) with a total capacity of 1,464 rooms.

Based on the terms of the deal, the management of the hotels remained with Louis Group, but the ownership went to HIP Blackstone's hospitality company. HIP is one of the largest hotel owners in southern Europe, controlling 65 hotels with a capacity totaling more than 19,000 rooms.

H.I.G. also has expansion plans for Greece after recently agreeing with Dimand Real Estate to finance the Greek company's new projects in tourism, holiday homes, and office buildings. H.I.G. will provide finance of about 150 million euros that Dimand will be able to access. The Greek company's goals are to have access to finance options that will allow it to take advantage of investment opportunities that arise.