Dutch pension fund manager APG has backed a European value-add hotel fund managed by Madrid-based real estate manager Azora, according to sources.

Azora said it has exceeded an initial €600m fundraising target for its newly launched Azora European Hotel & Lodging (Azora EH&L) fund to raise €680m.

The Azora EH&L fund has a €750m hard cap target, which when achieved together with leverage, will give the fund more than €1.5bn of investment firepower.

The initial capital raised was committed “throughout the lockdown period and demonstrate investors’ continued confidence in both the long-term performance of the tourism industry despite the impact of COVID-19”, the manager said. 

Azora said the fund received capital commitments from an unnamed group of global investors, including one of Europe’s largest pension fund investors, non-European sovereign wealth funds, and a large global institutional investor.

IPE Real Assets understands that the APG, as one of the investors, has committed an undisclosed amount to the fund.

Investors will also have the option to provide co-investment capital alongside their commitments, further expanding the investment capacity of the fund, Azora said.

The Azora EH&L fund will focus on the “sun & beach” segment across Europe’s top tourist destinations as well as urban lodgings.

Azora said it has already secured a portfolio of 10 hotels comprising seven assets on the mainland Spanish coast, two in Ibiza and a single asset in Sicily.

Concha Osácar, Azora’s founding partner, said the level of commitments achieved so far for the 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, regardless of the short term impact of the COVID crisis”.

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