European real estate manager Redevco has entered the hospitality space with the acquisition of six properties in Spain and Portugal for 80 million euros ($77.6 million).
The six undisclosed properties will launch Redevco’s “Next Gen Stays” joint venture platform intended to capitalize on the recovery of youth tourism and the experience travel market, according to a news release. The properties to be redeveloped into hotels are located in Lisbon, Bibao, Seville, Porto and Malaga. The company pre-leased the properties to a professional hotel operator at the time of acquisition.
The company plans to leverage its strong track record in retail and urban regeneration real estate investment along with best-in-class hotel operators, Israel Casanova, managing director global transaction management at Redevco, said in the release.
“The vast online ‘sharing economy' market that Airbnb identified and opened up is now professionalizing in a more community-focused way,” he said. “Our Next Gen Stays hotels form a distinct market sub-segment to target the younger, tech-savvy and sustainable travelers that are increasingly seeking out authentic, high quality yet affordable experiences.”
The Next Gen Stays investment strategy targets a net levered internal rate of return of 15% over a five-year period, the release said. The company is focused on under-exploited real estate with local character and redevelopment potential. It plans to build a 250-million-euro portfolio in the Iberian markets with a like-minded, joint-venture partner before it expands into a pan-European hotel vehicle with an investment volume goal of 500 million to 700 million euros.
The strategy also calls for sustainability and social returns through repurposing “architecturally interesting but outdated” buildings and upgrading the environmental footprints, according to the news release. Redevco has a mission of making all its properties net carbon neutral by 2040.