PEHF I

Overview

• The investment involved the acquisition of a portfolio of nine hotels across Spain, previously owned by the local construction group URVASCO, structured as a PropCo / OpCo transaction.

• The existing operator was retained under a long-term lease agreement with strong governance rights.

• The portfolio was acquired off-market in 2018 at a discount to the face value of the debt.

• In line with a low-risk, asset-management-focused mandate, no leverage was used for the acquisition.

Execution

• The CapEx programme included a soft refurbishment of guest rooms alongside enhancements to public areas, as well as targeted works to MEP and technical systems tailored to each asset’s requirements.

• Operational disruptions caused by COVID-19 were proactively managed to preserve a strong owner–tenant relationship while minimising the economic impact on rent payments.

• Specialised revenue management tools and dedicated teams were implemented to enhance profitability in hotels affected by short operating seasons or secondary micro-locations.

Sourcing

• The acquisition was sourced off-market by Pygmalion through market research and direct engagement with the owner, administrator, and creditors to secure the deal.

• Pygmalion successfully navigated a complex, 12-month negotiation involving the debtor, bankruptcy administrators, local courts, and three separate creditors.

• The transaction structure enabled tax-neutral pooling of investors while preserving Luxembourg participation exemption benefits.

Sustainability initiatives

• ESG actions were applied at both the asset and fund levels to enhance the green value of the portfolio.

• Energy-efficiency initiatives included CapEx investments to reduce consumption across the hotels, such as:

  • Replacing existing boilers and chillers with high-temperature heat pumps

  • Installing photovoltaic systems

  • Implementing consumption monitoring systems

• GRESB performance was tracked through an annual analysis of improvement areas across all ESG aspects, resulting in a score increase from 49/100 in 2020 to 84/100 in 2024.

• Building certifications were achieved through BREEAM In-Use certification (Good) and upgrades to the energy performance certificates (EPCs), reaching A and B ratings for all assets.