Next Monday, 16 November, at 16:00 (UTC+1), we will open the Playa de las Américas project for investment. This new debt investment opportunity is secured against an existing, operating aparthotel in southern Tenerife.
Urbanitae investors will contribute €3.5 million towards a senior mortgage-backed loan. The transaction has a term of 24 months and a fixed interest rate of 9.75% per annum, with one distinctive feature: part of the interest will be paid quarterly throughout the loan term.
- Investment opening: Monday, 16 November, at 16:00 (UTC+1).
- Webinar: Monday, 16 November, at 12:00 (UTC+1) – register here.
- Urbanitae investment tranche: €3,500,000.
- Term: 24 months + possible 12-month extension.
- Interest: 9.75% per annum.
An aparthotel already in operation
The asset is BARRANCO Chic! Apartments, an aparthotel located in the heart of Playa de las Américas, in the municipality of Arona.
It comprises 106 two-key-rated apartments and five retail units, each with independent access from the street.
The property was acquired in 2019 for €12.5 million and subsequently underwent a complete refurbishment, with construction expenditure of nearly €10 million. It has been open and operating since 2020, so unlike a conventional property development, there is no construction or planning-permission risk.
The aparthotel is approximately 400 metres from the beach and lies within the Arona–Costa Adeje tourism corridor, one of the Canary Islands’ main holiday destinations.
An asset already generating rental income
Another distinguishing feature is that the investment is backed by a stabilised property already generating cash flow.
The aparthotel is operated by Alegría Hotels under a long-term lease. In recent years, it has recorded occupancy rates exceeding 82%.
The agreement includes fixed rent linked to the Consumer Price Index (CPI) and a variable component tied to performance. Rental income from the five retail units provides an additional revenue stream.
Overall, the asset generated approximately €1.8 million in rental income in 2025, of which around €1.6 million came from fixed components. These revenues provide a margin of coverage for the loan interest payable quarterly.
What will the loan be used for?
Total financing amounts to €16.45 million, with Urbanitae investors contributing €3.5 million and the remainder provided by co-investors.
The loan has two main purposes.
Firstly, it will repay the €9.21 million of existing bank debt secured against the property. In other words, the new financing replaces the loan currently secured on the asset.
Secondly, it will enable a €6.29 million recapitalisation, allowing the shareholder to recover part of the capital previously invested in the project.
In other words, we are not financing the construction of a new property: the asset already exists, has been refurbished and generates income. The new financing reorganises its debt and capital structure around an already stabilised property.
How does the 9.75% interest rate work?
The contractual interest rate is fixed at 9.75% per annum, but it is split into two components:
- 5.75% per annum will be paid quarterly in cash, using the cash flow generated by the property’s rental income.
- The remaining 4% may also be paid in cash or, at the borrowing company’s discretion, capitalised.
If that 4% is capitalised, it is not paid in the relevant quarter. Instead, it is added to the outstanding loan balance and paid later. That amount also begins to accrue interest.
Therefore, the interest rate is not variable: it remains 9.75% per annum. What may change is when the investor receives part of that return.
The transaction also includes a minimum return equivalent to 18 months’ interest, approximately 14.6%, in the event of early repayment.
First-ranking mortgage and a 54.5% LTV
The loan is secured by a first-ranking mortgage over the aparthotel, together with additional security:
- First-ranking pledge over the shares in the borrowing company.
- Pledge over its bank accounts.
- Pledge over receivables arising from the lease agreements.
The total loan represents 54.5% of the property’s appraised value, which stands at €30.17 million.
LTV measures debt relative to a property’s value. In this case, the loan represents slightly more than half its current valuation.
The transaction also sets a maximum LTV of 57.5%. If the ratio exceeds 55%, a cash sweep is triggered: all available net cash flow from the asset must be used to repay debt until leverage is reduced again.
How will the loan be repaid?
The expected term is 24 months, although there is a possible extension of a further 12 months.
The primary planned exit is through refinancing or selling the asset.
Refinancing means that, at maturity, a new lender provides a loan secured against the aparthotel, and those funds are used to repay the existing debt. This is common for income-producing properties that can remain in operation for many years: the maturity of a loan does not necessarily mean the owner must sell the property.
Selling the entire aparthotel is another potential exit route. The documentation also considers other alternatives, including a possible sale of individual units.
Why invest in Playa de las Américas?
We believe Playa de las Américas has an unusual structure compared with many of our debt projects: rather than financing a development under construction, the loan is secured against a completed, stabilised asset that already generates recurring rental income.
Key highlights include:
- Fixed interest of 9.75% per annum.
- Quarterly cash payments of part of the interest.
- Minimum return of 18 months’ interest, equivalent to approximately 14.6%.
- First-ranking mortgage over the asset.
- Initial LTV of 54.5%, with a maximum limit of 57.5%.
- Cash sweep if LTV exceeds 55%.
- Approximately €1.8 million in annual rental income.
- No construction or planning-permission risk.
- Aparthotel operating since 2020, with occupancy rates above 82%.
- Location in Playa de las Américas, one of Tenerife’s main tourist destinations.
Estimated timetable
The loan’s standard term is 24 months, with a possible 12-month extension.
The main expected milestones are:
- November 2026: loan granted and existing bank financing repaid.
- Quarterly: payment of the cash interest component, equivalent to 5.75% per annum.
- November 2028: expected refinancing or sale of the asset and repayment of principal and any capitalised interest.
Have questions about the project?
You can ask your questions during the Playa de las Américas webinar, which we will hold on Monday, 16 November, at 12:00 (UTC+1).
The project will open for investment on Monday, 16 November, at 16:00 (UTC+1).
You can also email us at contacto@urbanitae.com or call us on (+34) 911 23 25 22.
