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Playa sells Mexican hotel, goes ‘capital light’

Playa Hotels & Resorts NV on Monday April 19, 2021,  announced that it had entered into a binding agreement to sell its Capri Hotel in Mexico for a total consideration of US$55 million in cash. 

Playa owns and operates properties in Mexico and the Caribbean, including a portfolio consisting of 21 resorts (7,927 rooms) located in Mexico, Jamaica, and the Dominican Republic. 

Upon closing of this latest deal, the company expects to execute a management contract and will operate the resort once it reopens after repositioning and renovation.

 “These management contracts are a capital-light step forward on our path to operating a fully branded portfolio of all-inclusive resorts,” said Bruce Wardinski, chairman and CEO of Playa Hotels & Resorts in the company update.

Bruce Wardinski, chairman and CEO, Playa Hotels & Resorts (File photo)

Jamaican hotels changing hands

The sale follows the Playa’s offloading of Jamaican hotels Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark in May 2020. 

The company sold the properties for US$60 million (J$9 billion), below their fair value of US$85 million (J$12.6 billion), stating that it needed the funds for cash flow but also to pay down on a portion of its debt.

Jewel Runaway Bay, Jamaica. (Photo: Playa Resorts)

In January 2021, Sagicor Group Jamaica Limited which had sold the Jewel hotels to Playa and taken a stake in the international resort company, sold the Playa shares to parent company Sagicor Financial Corporation at US$5.00 per unit, resulting in gross proceeds of US$91 million ($12 billion) at the time.

Sagicor Jamaica said it took the decision to sell shares in Playa in order to “reduce the risk associated with our investments and the investments of our clients, in the wake of an unprecedented and significant downturn in the global tourism market due to the COVID-19 pandemic”.

Tourism taking a hit

Sagicor subsidiary Sagicor Real Estate X Fund Limited, last year posted billions in losses, mainly due to a write-down of the value of its investment in the Playa Hotels & Resorts chain, as  COVID-19- conditions  affected travel and hotels in global markets.

(Photo: Playa Group)

Shares in Playa, listed on the NASDAQ closed at US$7.28 per unit on April 19, averaging US$7.35 for the past one month.

The resort company, this week, also signed a new hotel management agreement for its 438-room hotel in Riviera Maya, Mexico.