Why Trinity is sold on new Barcelona asset

BARCELONA — Trinity Investment’s latest acquisition doesn’t match its typical U.S. investment thesis of acquiring value-add properties in need of capex, but it certainly fits its strategy in Europe.

Miami-based Trinity, Swiss private equity firm Partners Group and an unnamed thirty party (a private institution in Europe that preferred to remain nameless) acquired the 240-key The Hoxton, Poblenou in Barcelona from Norlake Hospitality in a deal announced on December 18. While the amount wasn’t disclosed, the broker’s pricing guidance on the hotel was around €120 million.

Partners and Trinity own the majority of the investment (with Partners owning the higher share) and Trinity will serve as the asset manager (while Ennismore will continue to manage the property).

Hotel Investment Today spoke with Trinity’s Ryan Donn, managing director and chief investment officer, who leads the London office, about the acquisition, Trinity’s pipeline, and the overall deal environment in Europe. 

Donn said Trinity began a serious review of the opportunity last spring and made an initial offer in April. He said the property is similar to another European investment for Trinity, the 266-key Standard London, which the company acquired with Partners and Oaktree Capital Management in November 2024 for a reported £185 million, in that both are relatively new hotels that don’t necessarily require much capex. He added that many other factors make The Hoxton, Poblenou acquisition appealing.

There’s been this very steady outsized growth of RevPAR relative to other major European markets, and yet, at the same time, it still hasn't reached the price point of the top-tier European capitals in terms of rate, like Paris, London or Rome.

Ryan Donn

Share this quote

“The value-add story, or the way in which we were getting value-add type of returns was being able to study and analyze and make some assumptions about the lift that comes from having a more robust infrastructure behind the hotel,” he said. “The quality and the experience itself on the front end to the guest won’t change too much… We did find a few things here and there to influence. We will invest a modest amount of capex, not a transformational one. (Donn said mostly in the F&B play and energy efficiency for the hotel.)”

What really appealed to Trinity, Donn said, was Barcelona itself.

“We leaned into the opportunity because it’s a market that has… a legally imposed moratorium on new hotel supply within its [urban] core,” Donn said, also noting that the Spanish Supreme Court recently upheld a complete Airbnb ban as well. “So, you actually have this shadow inventory that’s shrinking. By the best estimates, there’s something like 10-11,000 Airbnb units in Barcelona.”

Donn said that in other markets (like New York City), owners have seen pronounced occupancy and, especially, rate growth in markets with constrained supply or short-term rental bans.

Ennismore opened The Hoxton, Poblenou in Barcelona in 2022.

“I spoke with a lot of hotel owners in Barcelona, and they said it’s one of these markets that, because of these constraints and because of the desirability of the market, every time they think they’ve hit this stabilized RevPAR, or that things have plateaued, they just keep moving higher,” he said. “There’s been this very steady outsized growth of RevPAR relative to other major European markets, and yet, at the same time, it still hasn’t reached the price point of the top-tier European capitals in terms of rate, like Paris, London or Rome.

“We absolutely love the macroeconomic dynamic of Barcelona. It’s one of the reasons we weren’t necessarily looking only for this hotel. We were looking for quality hotels in Barcelona, and we were lucky to find this opportunity.” 

Deal environment in Europe

When asked about the current hotel deal environment in Europe, especially compared to the U.S., Donn said there are similarities: both have enjoyed post-COVID booms but have also seen RevPAR stagnation in the past year. So what’s different?

“The contrast is that financing costs, interest rates and spreads have both come in quite a bit quicker in Europe than in the U.S. So, base rates are lower and spreads are lower,” he said, noting that rates in Europe can be closer to 6% at the high end and as little as 2% on the low end, which is still a good 150 to 200 basis points narrower than in the U.S. “It means there is more debt liquidity, and therefore the bid-ask spread between transactions is narrower. So, there’s still a steady stream of deals, whereas in the U.S., post-Liberation Day, we didn’t see a lot of activity.”
So, are hotel deals more competitive in Europe? Not necessarily, Donn said.

“A year ago, I would say hospitality was maybe the most favored real estate class, maybe for the first time in a long time, or as long as I can remember, and it was therefore getting a lot of attention,” he said. “It’s starting to go back more towards what I would call the era of normalcy, where it’s a piece of people’s portfolios, but it’s not getting quite all the attention that it did for a couple of years. That’s good because it’s leaving us more room to operate.”

Trinity is sourcing several potential deals in Europe right now, and while Donn said he doesn’t know which will be Trinity’s next move, they do share a similar profile, spots on maps that are highly identifiable.

“I made the joke to myself that I want to do deals that I don’t have to explain the location to Americans,” he said.

We want to buy hotels where we can have an influence that are high quality in terms of asset profile, and also in terms of market, where we can influence outcomes and where we can make proper investment returns.

Ryan Donn

Share this quote

The type of hotels Trinity is pursuing in Europe (4-star upper upscale or upscale properties) is also entirely intentional, Donn said. He said another contrast between Europe and the U.S. is that in Europe, ownership of luxury hotels is more concentrated in the hands of ultra-high-net-worth individuals, sovereign wealth funds, or Middle Eastern or Asian capital.

“We’re not intending to compete in that space of owning trophies at sometimes non-economic terms,” he said. “We want to buy hotels where we can have an influence that are high quality in terms of asset profile, and also in terms of market, where we can influence outcomes and where we can make proper investment returns.”

The lending environment can be more complicated, too, in that in Europe borrowers often have to choose between a local or regional bank that might offer better terms but move more slowly, versus a bank that can do business internationally. (In this case, the borrowers ended up with a loan from an unnamed U.S.-based institutional lender.)

“Those are the two options, do you borrow domestically… usually at lower LTV, but lower cost, or do you get what I would call more U.S.-style, 65% LTV, common financing?” Donn said. “We went the international route just for confidence in the velocity of execution, not necessarily the risk of outcome, but just because when you need certainty of performance, then it’s worth a little bit extra spread.”