UPDATE: Vilamoura “goes for a song” to Americans

It’s finally official – Vilamoura has been taken over by American private equity firm Lone Star Funds for a reported €200 million.

If the figure is correct it means the resort has “gone for a song” – three times below the price set before the financial crisis.

Nonetheless, the US fund that has acquired Garvecat – the company responsible for Vilamoura’s resort – has described it as the “largest property transaction of 2015”.

Not included, however, are any of the complex’s world-renowned golf courses.

Diário de Notícias newspaper claims Lone Star paid “around €200 million” for the resort.

This has yet to be confirmed, but if it is, it will mean it was sold for a knock-down price – considerably lower than the €360 million paid for it in 2004.

Meantime, details of what lies in store remain thin on the ground.

In a short statement, Lone Star said it plans to “strengthen and revive” Vilamoura through a long-term investment plan.

The agreement will see Lusort, the company that manages the marina and most of the resort, changing hands from Catalan savings bank Catalunyacaixa to Lone Star Funds.

Francisco Sottomayor, head of development of CBRE Portugal that oversaw the deal, admitted that reaching an agreement had been “difficult”.

“It was an extremely complex deal, not only due to its scale, but to the type of asset it is: a group of companies with a very diverse range of assets, including many plots of lands, the concession of the best Portuguese marina and a significant number of already-constructed buildings,” he explained.

As CBRE points out, Vilamoura is the oldest resort in Portugal and “one of the most popular tourist destinations” in Southern Europe. Boasting 2,000 hectares, the resort also features a marina with 825 berths as well as its internationally-recognised and wholly independent golf courses.

There is still 700,000sqm of land available for further construction, including the controversial project ‘Cidade Lacustre’ which calls for the artificial flooding of thousands of hectares of agricultural land to create a “lake city” de-luxe complex.

Deal described as a “vote of confidence”
Speaking to Lusa news agency, the Algarve’s ‘Father of Tourism’ André Jordan – a former owner of the resort who sold it in 2004 for €500 million – said the deal was a “vote of confidence” for the Portuguese market and its foreign investors.

“It’s a stimulating factor for our market and it breeds confidence among our investors,” he said.

Jordan added that he had spoken to the American investors and that they are planning to “invest heavily in marketing and promotion”.

“Nobody invests €200 million to lose,” he concluded.

Lone Star background
Lone Star was founded in 1995. Since then, it has organised 14 funds with “aggregate capital commitments totalling over $54 billion”.

On its website Lone Star says it seeks investment opportunities in “developed markets that have suffered an economic and/or banking crisis, resulting in a dislocation in asset pricing and value opportunities”.