Newly listed SPAC’s plan for Mexico

LONDON – London-based but Mexico-born CEO of Murano Global Investments Elias Sacal said he knows the dealmaking ropes in his homeland. Afterall, his family has been developing in Mexico for years and for the past 20-plus years he has deployed more than $2 billion in capital for the acquisition, repositioning and development of real estate projects, more recently including hotels.

“We speak the language, we understand the language, we know how to get through the process of construction,” Sacal told Hotel Investment Today. “We deal with the unions within the government and we know exactly how to have good relations to develop things… We are like a good door for those who want to come in and invest in Mexico.”

Sacal started in real estate by investing in and managing some 1,500 rental and condominium units for wealthy Americans and Canadians looking to retire or have a second homes in Mexico. He started in Puerto Vallarta and grew in Ixtapa and Cancun.

Murano Global Investments just opened the all-inclusive Hyatt Vivid in Cancun

In 2015, Sacal started investing in hotels and today, along with his son Marcos, the COO, Murano’s portfolio includes the Hotel Andaz (operated by Hyatt) and Hotel Mondrian (operated by Accor) in Mexico City as well as luxury projects in Cancun, which include the 1,016 room Grand Island I hotel with the first 400-room tower newly opened under Hyatt’s Vivid all-inclusive brand. Another tower there will open under Hyatt’s Dreams brands. He also has hospitality and hotel projects in Baja and more plans for Cancun.

To raise capital for development and further expansion, in March Murano completed its business combination with HCM Acquisition Corp., a special purpose acquisition company. The combined company operate as Murano Global Investments and its common stock and warrants began trading on the Nasdaq Capital Market under the ticker symbols “MRNO” and “MRNOW,” respectively.

“Becoming a publicly listed company represents an important milestone for our organization as it opens up a new source of capital and significantly enhances the international profile of the company, which will help to advance our growth plans,” Sacal said. “We are primed to steadily expand our portfolio in top tourist destinations across Mexico.”

Shawn Matthews, CEO of HCM stated, “Murano Global Investments is one of the very few entities that have the vision, experience and professional network to succeed in Mexico’s nuanced real estate development and hospitality market. It is these differentiators that initially drew us to the company and having gotten to know the team better over the course of this process. I’m confident it will succeed in executing its growth strategy.”

Big capital raise comes first

Since the public listing did not raise new funding, the first priority is to raise capital to start up development plans, first in Mexico. “We need to raise $1 billion to develop the portfolio that we have,” Sacal said. “We have a very good pipeline with signed contracts. So, the next challenge is to raise further capital, execute the bonds, get construction loans from the banks and build our pipeline.”

Once capital starts to come in, the priority development will be in Cancun, where Murano has the rights to the World Trade Center brand and plans to create a big commercial center with convention facilities and multiple hotels with up to 3,000 rooms.

We want to buy two or three portfolios in the next five years – maybe another 1,000 to 2,000 rooms – in strategic locations.

Elias Sacal

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Over the next five to seven years in Mexico, Sacal said Murano should have about 4,000 rooms in Cancun, as well as the new developments in Baja to add to its holdings.

Murano is also planning two 400-room hotels for Baja, one with Hyatt and another with another major U.S.-based operator, Sacal said.

Additional growth includes the exploration of a potential entertainment village in Baja for cruise ship passengers departing California who are now required to make a stop the first night out of American territory. The plan is not yet fully realized, but the hope is to create docks for two cruise ships, where Murano will offer day passes to their village.

What Murano will not do is invest in small business hotels in Mexican markets that are in vogue due to ongoing nearshoring of production by U.S. companies. The margins for those hotels aren’t big enough to suit Murano’s purposes, Sacal said. But what he is considering, is building logistics and industrial parks as he thinks warehouse space is at a premium.

Looking outside of Mexico, Sacal said Murano wants to buy properties that need a new brand and/or management and an overall refresh to increase their potential. He said they will likely look in Latin America, the Caribbean and eventually in U.S. resort markets like Florida and Hawaii. “They are tired because they are owned by big families or hedge funds and need a fresh start,” he said. “We want to buy two or three portfolios in the next five years – maybe another 1,000 to 2,000 rooms – in strategic locations.”

Even with a pipeline and new access to capital through the SPAC, Sacal said Murano will walk before it runs, operating in what he calls more of an incubation mode to show the public market it can deliver results through strong asset management.

If all goes well, a second and third public offering could come to market within 24 months, Sacal said. “But for now, I probably prefer to be like a boutique company,” he said, adding that the stock remains in the $12 per share range, the higher end of its original float.

Sacal added that the company is likely to move its base to the U.S. within two to three years and within 10 years reach a portfolio of 20 to 30 hotel properties.