Main Photo: The Westin Venice, one of the hotels acquired from Algonquin in May 2018
Date: January 2020
Location: Western Europe
No. of Keys: 10 – 15 hotels – around 2,000 rooms
The Fund: UK-based investment manager Schroders has announced the initial closing of its first hotel fund, Schroder European Operating Hotels Fund I, with €305m of equity commitments from European institutional investors and family offices.
The vehicle’s investment strategy is based on the acquisition, renovation and operational improvement of existing 3 to 5-star hotels in business and tourism destinations in Western Europe. The strategy combines the ownership of the properties and the underlying operating activities of each hotel to create a diversified portfolio of 10 to 15 European establishments.
“The support we have received from our long-standing institutional partners reinforces our business and strategy,” said Frédéric de Brem, Head of Schroder Real Estate Hotels. “With 60% of the fund’s target size of €500m already raised, and several other investors under discussion, we expect to close the fund in a few months time with approximately €800m of capital (including 40% leverage) and a strong investment pipeline including two assets that are already in exclusive negotiations by Schroder Real Estate Hotels.”
The fund is structured as a special limited partnership (SCSp) under Luxembourg law, with an investment period of three years and a lifetime of eight years.
Georg Wunderlin, Global Head of Private Assets, Schroders, added: “While yields are at their lowest in many real estate sectors, we believe that this segment of the hotel market has the potential to generate attractive risk-adjusted returns for investors looking for alternative and non-traditional opportunities.”
Schroder Real Estate Hotels, formed following the acquisition last year of Paris-based specialist pan-European hotels group Algonquin, comprises almost 40 people operating from Schroders offices in London, Paris and Brussels. The team has purchased over 100 hotels over the last 15 years. The fund represents the team’s first vehicle with committed capital.
THPT Comment: Interesting new fund on the European scene with a great pedigree…can we start a book on where the first acquisition will be?
First Seen: Business Immo Eu
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