An open-ended core-plus European real estate fund managed by Catalyst Capital is diversifying its strategy with a new €250m hotel investment programme.

Catalyst Capital said Catalyst Core Plus European Property Fund (CCPEPF) has secured further equity commitments from ”international institutional investors eager to capitalise on opportunities arising from the hospitality sector”, investing alongside the €1.3bn evergreen fund.

CCPEPF’s previous investments include offices and retail assets.

The manager said the new hotel investment programme will target properties in gateway European cities with “high barriers to entry and limited competitive supply, which can be transformed into 4 and 5-star tourist hotels with pre-lets to established operators or management contracts”.

As part of the new strategy, CCPEPF has bought the former Diplomático Hotel in Rua Castilho in Lisbon from a family office for €14.8m. 

A further €9m will be invested to refurbish the 95-room 4-star boutique hotel which will be operated by Staycity under its Wilde Aparthotels brand, the manager said, adding that the refurbishment will begin next year and is expected to complete in 2023.

Kean Hird, a partner of Catalyst Capital and the fund manager of CCPEPF, said: “We believe there is a compelling opportunity to deliver a series of tourist hotels in European Capital city centres as demand rebounds and performance recovers, with a full recovery in hotel demand expected to return across Europe by 2023.”

Diversification in the fund’s assets across different sectors, asset classes and geographies has served the fund well during Covid, he said.

Kean added: “Global travel was temporarily interrupted by the pandemic, and Europe is the global leader in international tourism. Leisure-led domestic and international travel is laying the foundation for recovery across Europe, as the preference for leisure experiences increases post-Covid.”

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