BlackRock Real Assets has acquired a pan-European hostel portfolio as part of a 100 million euro joint-venture with Amistat International, a market-leading hostel operator. The off-market acquisition comprises a seed portfolio of three assets, with an active pipeline of another six assets. The transaction is consistent with BlackRock’s value-added strategy, focusing on value creation with an allocation to low-beta alternative sectors, such as student housing and hostels.
Thomas Mueller, European Head of Value-Added Real Estate, comments: “this transaction presents an opportunity to gain early-mover access into an increasingly institutional but undersupplied asset class. The demand profile for hostels is particularly appealing given the lack of quality, modern stock in the market, which is characterized by fragmented ownership and very low brand penetration.”
While the presence of institutional capital in the hostel market has historically been limited due largely to the disjointed market and difficulty in accessing stock and achieving scale, interest is growing from institutional investors who have invested or expanded in recent years and for whom the acquisition of a portfolio of operational assets should be attractive.
Frank Orenstein, CIO and Partner at Amistat adds: “We see Amistat as a pioneering lifestyle brand that offers stylishly-designed, safe and tech-infused social hubs aimed at experience-hungry youth travellers of the 21st century. In our hostels we are offering shared – and private rooms, both with ensuite bathrooms, bars, dining/cooking areas, work-spaces, chill-out zones, high-tech connectivity and engaging activity programmes. For the young travellers the “living like a local” experience is gaining more and more importance”.
BlackRock Real Estate is the dedicated real estate investment group within BlackRock Real Assets and invests in strategies across the risk and return spectrum, providing access to all major property types. The business manages over US $23 billion of private and public real estate equity and debt on behalf of investors worldwide in 17 offices across 11 countries in Asia-Pacific, Europe and the US.