To help reduce rising debt, German holiday maker TUI Group has agreed to sell its 49% stake in Riu Hotels real estate assets to Saranja, an entity of Riu Group owned by siblings Carmen and Luis Riu. The deal would give the joint venture an enterprise value of €1.5 billion (US$1.8 billion) with its real estate portfolio comprising 21 properties, of which two remain in the pipeline.
Spain’s Riu family already holds a 51% stake in these 21 properties and will now become the sole owner.
TUI said the expected net cash consideration for the sale stands at €540 million (US$658 million), adding that including an earn-out-element – payable once RIU Hotels delivers its budgets for 2022 and 2023 – it would grow to €670 million (US$817 million).
TUI added that a separate and long-standing joint venture with RIU that includes some 100 hotels and resorts around the world is unaffected by the deal.
Separately, TUI Group announced the sale of the Tenuta di Castelfalfi Estate in Tuscany to the family of S P Lohia. Also falling under the non-core asset sale strategy, the estate includes two hotels, six restaurants and bars, a 1,000 sqm spa, a 27-hole golf course and significant residential development potential.
TUI’s net debt reportedly stood at €6.8 billion (US$8.3 billion) as at March 31, an increase of just over €1.9 billion (US$2.3 billion) from a year ago. It reported a net loss of €1.5 billion (US$1.8 billion) for the six months to the end of March.
The aim of the deal for TUI is to strengthen its core business, focusing on holiday experiences, through the development, operation and marketing of hotel and holiday brands. It wants to grow primarily via management of its hotel brands TUI Blue, RIU, Robinson, TUI Magic Life.
The transaction is expected to be completed in late summer 2021.