European hostel chain A&O Hostels, owned by StepStone Group and Proprium Capital, has acquired a former office building in central Berlin for conversion into Europe’s largest hostel.
A&O purchased the asset from PIMCO Prime Real Estate on behalf of Allianz.
A&O said it plans to spend €40m transforming the 31,000sqm property into a 2,500 bed hostel. The building is located in Rudi-Dutschke-Straße, in the heart of Berlin’s Kreuzberg tourist district, close to Cold War landmark Checkpoint Charlie.
This latest transaction extends A&O’s footprint in Berlin, taking it to a total of 8,000 beds once the property is complete. The hostel, which is expected to be completed in the first quarter of 2027, will comprise a total of 610 rooms offering a mix of private and shared space.
The project is part of A&O’s initial €500m investment programme, which the company said has been able to take advantage of the “growing opportunity to convert offices and hotels which have reached the end of their natural life or where the ESG-led capex requirements to bring them up to today’s standards are uneconomic”.
Oliver Winter, CEO of A&O Hostels, said: “Leveraging our in-house development capabilities will enable us to deliver another highly sustainable, modern hostel, and the largest in Europe. This landmark investment is a major statement of our ambition, as we continue to drive the rapid growth of the a&o platform.
“Democratising access to prized urban destinations is a core pillar of our strategy – combining our deep investment and operational expertise and the sector’s favourable tailwinds will drive even stronger overnight stay and revenue performance.”
Philipp Westermann, partner at Proprium Capital Partners, said: “We continue to invest in new opportunities at pace and scale, benefitting in particular from the increasing obsolescence challenge facing owners of secondary office and hotel assets.
“The European hostel sector remains highly fragmented, which presents a compelling opportunity to harness our proven model, strong digital booking engine, and institutional-grade management infrastructure to further establish our market-leading position.”
Josh Cleveland, head of EMEA at StepStone Real Estate, added: “This transaction, which will deliver Europe’s largest hostel, is another demonstration of how we are delivering on our growth strategy ahead of schedule, in one of our high conviction commercial real estate sectors.”
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