Refinancing a hotel portfolio in the Canary Islands is very complicated if the tax system is hindered by optimization tools provided for in the REF, especially the Canary Islands Investment Reserve (RIC), because any revision due to a change in criteria can be triggered at the slightest. However, there are very useful development proposals in the banking sector. One of them is through CMBS (Commercial Mortgage-Backed Securities), one of the main systems used by Blackstone, the largest hotel operator in southern Gran Canaria, and which has opened a window of opportunity for local entrepreneurs to follow its example.
Let's see how it would work in a realistic scenario for a mid-sized hotel in Maspalomas: A 150-room hotel in Maspalomas, with an average occupancy rate of 75% per year, an average daily rate of €120, an estimated annual revenue of €4,9 million, and current bank debt of €3,5 million at an interest rate of 4,5%, could be used to generate a CMBS, where the owner creates a financial vehicle in which the hotel's future cash flows (rent, services, and extras) back a bond issue. This instrument is offered to institutional investors, who pay immediate capital in exchange for future payments guaranteed by the hotel.
For refinancing through a CMBS issue, the hotel could obtain, for example: €3,5 million to repay existing debt, a reduction in interest rates to 3%, freeing up approximately €35.000 in annual financing costs, and the possibility of obtaining additional capital of €500.000 to €1 million for renovations, expansions, or marketing. Regarding benefits, this provides immediate liquidity without selling the hotel, improves net profitability thanks to lower interest rates and planned amortization, and strengthens the hotel's image with investors, facilitating future financing rounds or strategic partnerships.
Banking experts in southern Gran Canaria consulted by Maspalomas24H point out that, although traditional CMBS requires specialized financial advice and transparency in the hotel's revenue, even independent hotels with clear balance sheets and stable occupancy can access this type of financing, especially if they have the support of recognized rating and auditing agencies.
In a context where air connectivity with Europe and Gran Canaria's tourism market remain robust, commercial mortgage securitization can become a strategic growth tool for the local hotel industry. For a mid-sized hotel, this approach not only secures low-cost capital but also allows it to compete at the same level as large international chains without losing ownership of the asset.
