Eurazeo, a leading global investment group, and the Public Sector Pension Investment Board, one of Canada’s largest pension investment managers, have created a joint venture to focus on investing in hotels across Europe, targeting large assets or portfolios well-positioned to benefit from the sector’s recovery.
The partners plan to invest up to €300 million of equity in hotel assets or portfolios across Europe, which offer significant potential to unlock value through upgrades and targeted asset management initiatives.
Eurazeo and PSP Investments will invest equal amounts in the joint venture, which is set to benefit from "Eurazeo’s well-established track record in the sector, the recognised execution capability of both firms and their commitment to sustainable growth", the pair said.
The partnership has already bought its first investment, FST Hotels, a Spanish hotel group that owns and operates an 800-room portfolio across five hotels, primarily in Madrid and Barcelona. The hotel group, operating under the Ayre brand, will be acquired from Grupo Empresas Matutes and El Corte Inglés for a reported €130 million. The hotels will undergo refurbishment, repositioning and rebranding to take full advantage of the anticipated industry recovery following the pandemic.
Completion of the transaction remains subject to clearance by the relevant antitrust authorities and should take place by the end of March.
“We anticipate the hospitality sector in Europe will present an attractive recovery play as travel resumes and, together with Eurazeo, are working to capitalize on this opportunity," Stéphane Jalbert, managing director, head of Asia-Pacific and Europe, real estate investments, PSP Investments, said. The pension investment manager has $205.4 billion in assets under management.
A refurbishment program will be carried out with a strong sustainability component, focused on monitoring and reducing water consumption, energy usage, and carbon emissions to support climate action.
“Since establishing our real estate division in 2015, Eurazeo has invested almost €900 million of equity from its balance sheet in real estate opportunities targeting properties and companies with underlying real estate assets across Europe,” Renaud Haberkorn, managing partner of real assets at Eurazeo, said. “ Exits to date have delivered strong performance and, with our proven track record, we are now looking to invite like-minded third-party partners to invest alongside us in a pan-European opportunistic real estate investment program. “