The Abba hotel chain has joined the ranks of businesses using the model of selling a property and then renting it back from the new owner, known in the market as a sale and lease-back deal, with one of its hotels in Spain. More precisely, the hotel group controlled by Andrés Iráculis and Jeronimo Miñon has sold the hotel Abba Plaza Castilla in Madrid.

The deal was closed for 33 million euro and a yield of more than 7%, which represent very attractive numbers given the current state of the hotel market in Spain. The purchase was concluded by a group of Spanish investors headed up by the Milenium Group.

The hotel is a four star establishment that has 228 rooms and is situated in the north of Madrid opposite the Kio Towers and just a few metres away from the Cuatro Torres Business Area. Abba was advised on the deal by property consultants Aguirre Newman. The agreement means that Abba receives an injection of capital without sacrificing any share of the Madrid hotel market.

The use of the sale and lease-back formula has recently become more popular among hotel groups in Spain. Last year Sol Meliá used it to sell the Hotel Meliá Princesa for 87,8 million euro to BBVA Renting. And, other hotel groups have availed of the formula like Confortel and NH Hotels, who sold the hotel Sanvy to the company Madrid Leasing (part of Caja Madrid and Mapfre).

The owners of Abba have a long heritage of hotel ownership in Spain. The story began in the 70s with the Hesperia Group, some of whose founders went on to set up the Silken Hotel group and one of them, Andrés Iráculis, then launched Abba Hotels.