Schroder Real Estate and BAE Pension Funds acquire the Sofitel London Gatwick

Schroders has acquired the Sofitel Gatwick North Terminal on behalf of a joint venture (JV) between BAE Pension Funds, and Immobilien Europa Direkt, an investment vehicle of Zurich Investment Foundation managed by Schroders.

The Sofitel marks the ninth hotel transacted by Schroder Real Estate following the successful integration of specialist hotel investment management platform, Algonquin Management Partners, acquired in May 2018. This transaction takes hotel assets under management to 51 assets, c.10,000 bedrooms, and a value of £2bn.

Occupying a prime location with direct access into the airport terminal, the hotel comprises 518 bedrooms with 565 parking spaces, five food and beverage outlets, 11 meeting rooms and 5,000 sq ft of office accommodation.

The hotel will continue to be operated by the previous owner, Arora Hotels, under a lease which provides a long term income from one of the leading hotel operators in the United Kingdom.

Gatwick Airport has experienced strong growth in passenger numbers in recent years and is expected to enjoy further growth over the next five years, boosted by the ongoing trend of increased global travel, as well as significant investment from the airport’s owners.

As part of the transaction, the buyer was advised by CMS, Stephenson Harwood, Carey Olsen, Osborne Clark, and PWC. The seller was advised by Burges Salmon and Eastdil Secured.

Ben Ward, BAE Pension Funds, commented:

“This investment provides an attractive combination of increasing occupier demand as the airport expands capacity, but with relatively few supply threats. Schroders’ deal structuring also worked particularly well for our risk averse investment strategy.”

Duncan Owen, Global Head of Schroder Real Estate, commented:

“We are delighted to enter into a JV with a compatible long term investor such as BAE Pension Funds. Acquiring the Sofitel London Gatwick hotel utilises Schroders’ expert hotels platform, supporting attractive returns for both investors. This prime location has the potential to deliver long term income within a sector that provides defensive qualities in conjunction with upside potential through active management.”

Stéphane Obadia, Head of Investment at Schroder Real Estate Hotels, commented:

“We are thrilled by this acquisition, which combines our expertise in structuring creative investments alongside partnering with experienced operators to acquire some of the most prime hotels in the best destinations throughout the UK and Europe. With some exciting refurbishment works planned for the property, we will be happy to support the hotel in further developing the superior position it has gained in the Gatwick market.”