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Mandarin Oriental teams up with Saudi MNC to buy Hotel Ritz in Madrid
MANDARIN Oriental International, a subsidiary of mainboard-listed Jardine Strategic Holdings, said on Friday that it will acquire the Hotel Ritz, Madrid, for 130 million euros (S$192.9 million) in a joint venture (JV) with The Olayan Group, a Saudi Arabian multinational group.
Mandarin Oriental and Olayan will each hold a 50 per cent interest in the JV, after purchasing all of the shares in the owning company, Hotel Ritz Madrid, from its existing shareholders, Belmond Spanish Holdings and Landis Inversiones.
The 167-room hotel, which first opened in 1910, will undergo a comprehensive renovation in 2017. This is currently estimated to cost some 90 million euros, said Mandarin Oriental in a statement.
The renovation will encompass all rooms and public areas, and include the addition of a spa and a variety of new restaurants and bars, all designed to enhance the hotel's position.
Mandarin Oriental's total investment for its share in the project - including the acquisition, renovation and transaction expenses - is estimated at 111 million euros, with the group's share of the purchase price to be paid from cash reserves, and the renovation to be funded through a mix of equity and debt.
Mandarin Oriental will manage the hotel under a long-term management agreement.
For the year ended December 31, 2014, Hotel Ritz Madrid reported gross assets of 129 million euros and an EBITDA of 2.6 million euros. The acquisition is expected to have a positive impact on future group earnings, said Mandarin Oriental.