The French fund Covivio returns to the hotel market with the €81M purchase of Iberostar Las Dalias, its first deal since 2020, leased until 2041.

In a significant resurgence within the hospitality sector, the French investment fund Covivio has made a notable re-entry into the hotel market by acquiring the Iberostar Las Dalias in Tenerife for a substantial sum of 81 million euros. This transaction marks Covivio’s first foray into hotel acquisitions since the onset of the pandemic in 2020, signaling a renewed confidence in the sector.

The Iberostar Las Dalias, a four-star establishment boasting 429 rooms, was previously leased from Starwood Capital by the Fluxá family chain, with a lease agreement extending until 2041. The timing of this acquisition is particularly noteworthy, as it coincides with a flurry of activity among investors in the final weeks of December, all eager to finalize hotel purchase operations that have been in the pipeline for several months. 

Interestingly, the last two weeks have witnessed a common thread: both transactions involved substantial financial commitments and properties situated in Tenerife, an increasingly attractive locale for institutional funds seeking lucrative opportunities. Just days prior to Covivio’s announcement, the REIT Atom, backed by Bankinter and GMA, disclosed the sale of the Labranda Costa Adeje hotel, also in Tenerife, to a local family group for an impressive 110 million euros.

Covivio’s strategic move is underscored by its recent Capital Markets Day held on November 28, where the company articulated its ambitions for growth, particularly within the leisure segment of the hotel sector in southern Europe. This renewed focus is evidenced by two pivotal decisions: first, the increase of its stake in Covivio Hotels to 52.5% in the first half of the year, and second, the establishment of a joint venture with AccorInvest aimed at acquiring and operating hotels.

As part of this alliance, Covivio is set to acquire 24 hotels from AccorInvest for a total of 266 million euros, while AccorInvest will take ownership of an additional 10 hotels for 208 million euros. This consolidation not only enhances Covivio’s portfolio but also reinforces its commitment to the hospitality industry, positioning the fund for future growth in a sector that is gradually rebounding from the challenges posed by the pandemic.