Azora has raised €680m for its new fund focused on hotel investments around the Mediterranean.
The vehicle, launched last year, surpassed its initial €600m target, revealing investors’ confidence in the recovery of the hospitality industry despite the impact of Covid-19.
The Azora European Hotel & Lodging fund has a €750m hard cap and aims to invest in leisure hotel opportunities across Europe, mainly in Spain.
Azora has already secured a portfolio of 10 hotels comprising 2,800 keys and located in resorts on the mainland Spanish coast (seven), Ibiza (two) and Sicily (one), which are managed by MedPlaya and Palladium, two of the largest Spanish hotel operators, as well as four city centre assets in Madrid, Lisbon, Brussels and Bilbao, which will be repositioned as urban lodging concepts, offering 1,200 beds in aggregate.
“During these extraordinary times, the level of commitments we have achieved so far for the Azora European H&L fund underscores the international investor community's confidence in both our ability as a manager to create value and in the ongoing potential of the European hospitality industry as an institutional asset class,” said Concha Osácar, Azora’s founding partner.
Azora said that it believed that regardless of the short term impact of the Covid-19 crisis, the European hotel market represents a compelling opportunity underpinned by attractive supply-demand dynamics, where constrained supply is driven by a c. 1.1% CAGR in number of keys since 2009, versus c. 4.9% CAGR in international tourist arrivals in Europe. Furthermore, it said that it was a highly fragmented market which had attracted limited institutional capital investment to date, with 62% of the European hotels being independently owned compared to 30% in the US, resulting in an opportunity to source underinvested and under-managed assets for repositioning.
Azora described itself as the first institutional real estate investor and asset management firm to enter the “sun & beach” hotel segment in Spain, where it built the largest hotel platform through its Madrid-listed SOCIMI Hispania.