British multi-family office North Wind Capital has announced that it is teaming up with Banor Capital to launch a joint venture seeking to invest in hospitality assets across Europe. The new fund will target small and mid-sized hotels locked in distressed capital structures.
The joint-venture partners have said that the investment strategy will seek to target hotels with “multiple demand drivers” including those “over-encumbered by debt and capex-starved post-COVID.” The new fund will seek to source “off-market” acquisition targets through its proprietary network of relationships.
North Wind has made an initial commitment of £25 million (€29 million) to co-invest alongside UK FCA regulated Banor Capital. In turn, the independent asset manager has pledged to match all of North Wind’s investments in the joint transactions. Together, they plan to put together a hotel portfolio with total asset value of £500 million (€581.5 million), with a primary emphasis on the UK, Italy and Southern Europe.
After making each acquisition, the fund aims to be hands-on in various areas, including “capital structure stabilization, targeted capex investment, performance improvement through implementing operational efficiencies, and rebranding.”
Ben Williams, CEO of North Wind Capital, said in a statement:
“High interest rates have disproportionately hurt hospitality businesses. Many hotels accrued additional indebtedness to navigate trading conditions during COVID, creating broken capital structures among otherwise highly attractive hotels. Legacy pandemic-era sector disruption led to a backlog of sellers that deferred exits awaiting market stabilization.”
He continued by saying that the market dynamics have resulted in “opening the door for specialist hospitality investors like us to capitalize on, as travel demand for business and leisure recovers.”
Lorenzo Guidi, Executive Director at Banor Capital said:
“We believe legacy headwinds have created market dislocation in pockets of the European hospitality sector presenting compelling risk-adjusted investment opportunities for investors with the right mix of operational acumen, asset management and debt restructuring expertise. Our JV will identify fundamentally sound hotels with challenged capital structures, resolve the financial complexity, reposition assets and unlock the growth potential.”
Banor Capital is an UK-registered asset manager with over $1.5 billion in AUM. It is the investment manager for various Luxembourg-based investment companies.