BlackRock Real Assets has acquired a pan-European hostel portfolio as part of a €100m joint venture with specialist operator Amistat International.

A seed portfolio of three assets and pipeline of another six has been acquired off-market on behalf of a value-add strategy.

Thomas Mueller, European head of value-added real estate, said: “This transaction presents an opportunity to gain early-mover access into an increasingly institutional but undersupplied asset class.

“The demand profile for hostels is particularly appealing given the lack of quality, modern stock in the market, which is characterised by fragmented ownership and very low brand penetration.”

BlackRock said institutional investor interest was growing in the hostel market, despite limited activity in the past, due largely to a disjointed market and the difficulty in accessing stock and achieving scale.

Frank Orenstein, CIO and partner at Amistat, said: “We see Amistat as a pioneering lifestyle brand that offers stylishly-designed, safe and tech-infused social hubs aimed at experience-hungry youth travellers of the 21st century.

“In our hostels we are offering shared and private rooms, both with ensuite bathrooms, bars, dining/cooking areas, workspaces, chill-out zones, high-tech connectivity and engaging activity programmes.

“For the young travellers, the living-like-a-local experience is gaining more and more importance”.