Schroder Real Estate Hotels holds initial €300m closing for its debut pan-European operating hotel fund

Schroders is pleased to announce the first closing of its debut hotel fund, the Schroder European Operating Hotel Fund I (“the Fund”), with €300m of equity commitments from European institutional investors and family offices. It is structured as a closed-end limited partnership (SCSp) domiciled in Luxembourg with a three year investment period and eight year life.

The Fund’s investment strategy focuses on creating a diversified portfolio of between 10 to 15 European hotels through the acquisition, selected refurbishment and operational improvement of existing undermanaged or underinvested 3-5 star hotels across Western Europe’s business and leisure destinations. The Fund will own both the real estate and the underlying operating business of each hotel and Schroder Real Estate Hotels will either manage each property independently or work with an operator under a franchise or hotel management agreement.

The Schroder Real Estate Hotels team comprises almost 40 people operating out of Schroders’ offices in London, Paris and Brussels. The team has a successful track record in acquiring and operating hotels across Europe having purchased more than a hundred hotels over the last 15 years. Over 50 of these have been sold generating strong investment returns for the underlying investors including leading private equity real estate investors. The Fund represents the team’s first vehicle with committed capital.

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 €500m target fund size already raised, and several more investors in the process, we anticipate closing the Fund in a few months with c.€800m of capital (including leverage of 40%) and a strong pipeline including one property already in exclusivity.”

Georg Wunderlin, Global Head of Private Assets, Schroders, commented:

“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.”