StepStone and Proprium Capital Partners-owned European hostel chain A&O Hostels has secured an €874m refinancing facility from Apollo.
The financing, which is secured against A&O’s portfolio of 44 assets across 32 European hubs, will support the firm’s plan to double its portfolio within the next five years.
StepStone and Proprium Capital Partners sponsored the management-led acquisition of A&O at the end of 2023, enabling the firm to undertake an initial €500m platform expansion programme.
The senior multi-year loan replaces an existing facility with Apollo and will enable A&O to deliver on the next €500m phase of its growth strategy in its core markets.
Josh Cleveland, head of EMEA at StepStone Real Estate, said: “Owners and the management team have built something exceptional at A&O, growing the platform at pace while maintaining real discipline. Apollo’s commitment to extending this relationship on competitive terms is a strong endorsement of the strategy – and of the partner group delivering it.”
Philipp Westermann, partner at Proprium Capital Partners, said: “Despite its highly defensive characteristics and outperformance in recent years, underpinned by the attractive income profile, the hostels sector remains fragmented.
“This facility provides us with the firepower to capitalise on this opportunity and rapidly scale the platform through both asset and corporate acquisitions, alongside a long-term financing partner with a shared conviction in the sector’s fundamentals.”
Ben Eppley, partner and head of real estate credit, Europe, at Apollo, said: “A&O has executed on its accelerated growth strategy ahead of schedule whilst remaining highly disciplined.
“This transaction, in a sector benefitting from attractive compelling demographic and technological tailwinds, continues our track record in Europe of providing scaled financing alongside leading sponsors seeking holistic portfolio solutions.”
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