Fattal buys hotels in Scotland and Slovenia

David Fattal

Fattal Hotel Management currently has 100 hotels worldwide, and owns all or part of 51 of them.

Fattal Hotel Management Ltd. owner and chairman David Fattal is in a state of perpetual motion. Fattal Properties (Europe), managed by Daniel Roger, has reported to the TASE an agreement to acquire a hotel in Scotland for £43.5 million (NIS 213 million) and an exclusive agreement to acquire four hotels in Slovenia.

The hotel acquired by Fattal in central Edinburgh has a four-star rating, and the company plans to invest £3 million in upgrading and improving it, and in changing its brand name to the Leonardo chain. The hotel has 282 rooms, with a restaurant, bar, conference rooms, and 80 parking spaces. Completion of the deal is slated for October 7, 2016.

The report also indicates that the company plans to obtain financing for 60% of the deal from a foreign bank, with the rest coming from Fattal's own resources. In addition, the company is considering adding a partner with a share of up to 50% of the deal, thereby reducing the amount of equity Fattal will have to invest.

Fattal simultaneously also announced an exclusive agreement to buy four hotels with an aggregate 574 rooms and 30 conference rooms in Ljubljana, Slovenia for €45 million (NIS 190 million), giving Fattal its first foothold in Slovenia. The exclusive agreement is set for next month (by October 27), with Fattal conducting due diligence for the hotels by that date. In addition, Fattal plans to obtain external financing from a bank for 60% of the cost of the deal, with the remainder coming from its own resources.

The recent deals come on top of a memorandum of understanding signed by Fattal in the Netherlands (through a fully-owned sub-subsidiary) two week ago for the acquisition of lease rights in land zoned for construction of a three-star 500-room hotel in Amsterdam. The transfer of the lease rights and construction work on the hotel will cost €47.25 million. These deals are in addition to a €31 million deal in June for Fattal's acquisition of two hotels in Madrid with 75 and 153 rooms, respectively (through a sub-subsidiary founded in Spain).

Fattal stated, "The acquisition of the hotels is in line with our strategic plan for expanding the Leonardo brand in Europe and entering new and attractive targets. This expansion is the result of the trust we have received from the Israeli capital market through the demand for the company's bonds and the vote of confidence by the banking system in Europe in the chain's strength and management. In the current deal, we are entering Scotland for the first time and buying a hotel in Edinburgh, regarded as one of the most popular cities in Europe by both the business community and tourists spending their vacations there. At the same time, we have signed an exclusive agreement to buy four hotels in Slovenia. We will continue to strengthen the Leonardo brand in Europe by acquiring more hotels in attractive locations and improving our current hotels."

Six weeks ago, Midroog published a review of Fattal Properties (Europe), raising the rating for its bonds from A2 to A1, with a stable outlook. After the rating was upgraded, Fattal raised NIS 100 million in a private placement (expansion of Series A) for a limited number of investment institutions. As of the end of the second quarter, the company's debt totaled NIS 327 million, and its equity was NIS 734 million (€174 million). The company's second quarter revenue totaled €6.2 million, its operating profit was €5.7 million, and its net profit was €3.1 million.

Founded by David Fattal in 1998, Fattal Hotel Management currently has a total of 17,000 rooms in 100 hotels in Israel and Europe. The chain has 36 hotels in Israel, 16 of which it owns fully or in part, 13 of which it rents, and 17 of which it manages. The company has 64 hotels in Europe, of which it owns 35 fully or in part, rents 27, and manages two.

Published by Globes [online], Israel business news - www.globes-online.com - on September 22, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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David Fattal
David Fattal
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