Global investment manager Schroders has announced the first closing of its debut hotel fund, the Schroder European operating hotel fund I, with €300m of equity commitments from European institutional investors and family offices.
Frederic de Brem, head of Schroder Real Estate Hotels, said: 'The support we have received from our long-standing institutional investment partners is a strong endorsement of our business and strategy.
'With 60% of the €500 mln target fund size already raised, and several more investors in the process, we anticipate closing the Fund in a few months with some €800 mln of capital (including leverage of 40%) and a strong pipeline including one property already in exclusivity.'
The fund plans to created a diversified portfolio of between 10 to 15 European hotels through the acquisition, refurbishment and operational improvement of existing undermanaged or underinvested 3-5 star hotels across Western Europe. The fund will own both the real estate and the underlying operating businesses, with Schroder Real Estate Hotels either managing each property independently or working with an operator under a franchise or hotel management agreement.
'At a time when yields are at an all-time low across many property sectors we believe that this segment of the hotel market has the capacity to generate attractive, risk-adjusted returns for investors looking for alternative, non-mainstream investment opportunities,' said Georg Wunderlin, global head of private assets, Schroders.
The fund is structured as a closed-end limited partnership (SCSp) domiciled in Luxembourg with a three year investment period and eight year life.
The Schroder Real Estate Hotels team comprises almost 40 people operating out of Schroders’ offices in London, Paris and Brussels.