Capital raising for Schroder Real Estate Hotels' debut pan-European operating hotels fund surpasses €400 million

Schroders is pleased to announce that following another closing, it has so far raised €425m of equity commitments for its debut hotel fund, the Schroder European Operating Hotels Fund I.

The closed-end, Luxembourg domiciled Fund is targeting €500m of total equity. The majority of capital to date has been committed by some of Europe’s largest insurance companies.

Unlike many traditional hotel investment funds and managers who acquire a hotel property leased to a  branded hotel operator, the Fund leverages the Schroder Real Estate Hotels team’s vast experience of owning and operating the underlying hotels, to acquire the property and operate it independently or under a franchise or hotel management agreement. This enables the team to capture the majority of the upside for the Fund’s investors.

Frederic de Brem, Head of Schroder Real Estate Hotels, said: 

While the leisure and hospitality market has been hit hard by the global pandemic, we strongly believe that this will create some attractive opportunities. As a team which has completed more than 150 acquisitions and disposals over almost 20 years together, we have the experience and, with the Fund’s three-year investment period, the time to be patient and deploy the c.€700m of dry powder (including debt) very judiciously to create a high-quality diversified portfolio of hotels across some of Western Europe’s top business and leisure destinations.”

Robin Hubbard, Head of Real Estate Capital, Schroders, commented:

“These are unprecedented times across all real estate sectors with even the future outlook for offices being challenged. We are therefore extremely pleased to have the backing of some very supportive investors who trust  Schroders’ highly experienced hotel team to take advantage of the opportunities that we expect to arise in this specialist sector.  It is testament to the team’s track record that we have already been able to raise 85% of the target equity for a ‘first-time’ fund in just over six months, including recent closes during the worst of the lockdown. A final close is expected in Q4 2020.”

Schroders confirmed in January that the Fund had held its initial €300m closing at the end of December.

Schroder Real Estate Hotels is part of Schroder Real Estate which forms part of Schroders’ private assets business which is a key strategic priority for the firm.

This capability includes private equity, infrastructure, microfinance and impact investments, insurance-linked securities and securitised credit and has combined assets under management of £44.2 billion.*

*As of 31 December, 2019