Cyprus-based GlobalWealth Group PLC has approved and signed an investment agreement to acquire interests in a €2.5 million hotel development in Barbati, Corfu, as part of its strategy to expand its luxury tourism property portfolio in Greece.

The Cyprus Stock Exchange-listed company said the agreement covers the “Aspro Spiti Barbati Corfu” project and forms part of its wider business plan to build a portfolio of high-yield properties in Greece’s luxury tourism sector.

GlobalWealth said the investment is intended to strengthen the value of its assets while generating stable future cash flows.

The company also said part of the investment is intended to serve as seed capital before potentially becoming part of the portfolio of the Global Private Equity Real Estate Fund, which is to be managed by its subsidiary GMM Global Money Managers AIFM Ltd.

Any future transfer or contribution of assets to collective investment undertakings managed by GMM Global Money Managers AIFM will be subject to an independent valuation and a fairness opinion, in line with the requirements of the Alternative Investment Fund Managers Directive (AIFMD) and the company’s internal procedures for managing conflicts of interest.

The investment agreement brings together four parties, namely Alexander Corfu S.A., which is the contractor and founder of the implementation entity, GlobalWealth Group as investor, Alpha Alexander S.A. as project financier, and Alexander S.A. Holding Commercial and Provision of Services S.A. as hotel manager.

Under the agreement, GlobalWealth will gradually acquire full ownership of 32 hotel unit properties from the 99 units comprising the wider Aspro Spiti project, which has a total capacity of 220 beds.

The 32 units will be acquired through two special purpose vehicles (SPVs) established in Greece.

In addition, GlobalWealth will gradually acquire a 49 per cent equity stake in Alexander Corfu 2, a subsidiary of Alexander Corfu S.A.

The total consideration for the investment has been set at €2.5m, with the amount to be paid in five instalments of €500,000 each.

Payments will be linked to the certified progress of construction works and the acquisition of the relevant properties and shares.

The agreement also provides for security arrangements relating to the project’s outstanding financing.

GlobalWealth has consented to the registration of a mortgage over 20 of the unit properties it will acquire, securing the remaining project financing of €7.5m.

The parties have agreed that the encumbrances will be released gradually and independently in proportion to the repayment of the project’s loan principal.

Construction and delivery of the hotel complex and the relevant unit properties are expected to be completed within a maximum period of 36 months from the signing of the investment agreement.

GlobalWealth has also secured an exclusive right of first refusal to participate in future hotel development projects by the Alexander complex in Barbati, under the same terms and financial proportions as those contained in the current agreement.

The company said this right forms part of a broader development masterplan covering a substantial area of Barbati.

The wider masterplan covers 169,075.81 square metres, with a projected total buildable area of 23,000 square metres for luxury residential and hotel units.

The future development is expected to involve the gradual construction of up to six additional specialised hotel entities, which will be managed by Alexander S.A. Holding Commercial and Provision of Services S.A.

The company said its first-refusal rights would allow it to prioritise participation in subsequent phases of the development and benefit from the area’s longer-term growth prospects.

GlobalWealth said this would support the expansion of its asset base as well as the assets under management of the wider group.

Management of the hotel units developed under the agreement will be carried out exclusively by Alexander S.A. Holding Commercial and Provision of Services S.A.

GlobalWealth already holds a 16 per cent stake in the hotel management company, which also manages the five-star Ionian Crown Resort in the same area of Corfu.

The Aspro Spiti investment is therefore intended to provide GlobalWealth with exposure not only to the initial hotel development but also to potential future phases of the wider Barbati project.

The company said the agreement was consistent with its strategy of expanding its holdings in high-yield properties in Greece’s luxury tourism market, while seeking to generate recurring cash flows and increase the value of its property portfolio.

The planned development also gives GlobalWealth an opportunity to participate in further hotel projects in the same area through its contractual first-refusal arrangement.

The company said the broader masterplan’s scale and the potential development of additional hotel entities would provide opportunities to increase its assets and assets under management over the longer term.