Schroders Capital debut pan-European operating hotels fund exceeds €500 million hard cap

Schroders Capital is pleased to announce that its debut discretionary pan-European operating hotels fund has exceeded the €500 million hard cap target with its final close.

The Schroders Capital European Operating Hotels Fund has reached €525 million of investor commitments after having initially targeted €300 million, as result of significant investor interest in the strategy and the capabilities of the team to unlock these opportunities.

Investors encompassed some of Europe’s largest insurance companies, primarily from France, the Netherlands and Finland, as well as a sovereign wealth fund from the Middle East.

Assuming moderate leverage, the Fund has c.€850 million of capital to invest and is well-positioned to take advantage of the opportunities emerging across Europe.

The Schroders Capital real estate hotels team consists of almost 40 dedicated hotel investment and asset management specialists located on the ground throughout Europe. It boasts a 20-year track record of acquiring and operating the underlying hotels independently, as well as under a franchise or hotel management agreement. This approach enables the team to capture the majority of the operational upside for the Fund’s investors.

Frederic de Brem, Head of Real Estate Hotels, Schroders Capital, said: 

Covid-19 has been a massive learning experience, even for our highly experienced team. Our cost management skills have been carefully honed over the last year on the 50+ hotels currently managed by the team and we believe this will enable us to be even more effective in our new deal underwriting.

“We’re not a private equity player looking to generate out-sized returns by making large, risky recovery plays on distressed assets in average locations; we’re focused on securing off-market deals offering deal security to sellers of high quality assets in great locations that can benefit from further asset management optimisation. The Fund’s acquisition of the 5* Grand Hotel Central in Barcelona last month exemplifies this strategy. We have an active pipeline and hope to announce further investments in the coming months.

Sophie van Oosterom, Global Head of Real Estate, Schroders Capital, commented:

“We are really pleased with the strong support and recognition we’ve received from our clients for the team and the Fund. Our hands-on operational approach to this sector is a real differentiator.

“We believe these operational skills are becoming increasingly important even in the wider real estate market. Adopting this hospitality mindset that our team displays with respect to customer service, resource optimisation, and account management, is key to securing sustainable income and unlocking value for our investors. This does not apply exclusively to the hotel space but to all real estate asset classes.

“Schroders Capital real estate team aims to be at the forefront of this transition as we look to offer clients a solutions-based approach with sustainability at its core.”