North Wind and Banor target distressed European hotels with £500m fund

North Wind Capital and Banor Capital have partnered to launch a £500m (€581.6m) European hospitality fund.

North Wind Capital has initially committed £25m to co-invest alongside a matching investment from a fund managed by Banor Capital to seed the hospitality fund which will target small and mid-sized hotels “locked in distressed capital structures” in the UK, Southern Europe and Italy.

The venture’s investment strategy, which focuses on underperforming hotels with potential, will target properties with diverse income streams, brand possibilities, and opportunities to improve value. This could include hotels struggling with debt or inefficient management.

The venture’s plan is to assemble a hotel portfolio with a gross asset value of around half a billion pounds.

Ben Williams, CEO at North Wind Capital, said: “High interest rates have disproportionately hurt hospitality businesses. Many hotels accrued additional indebtedness to navigate trading conditions during COVID, creating broken capital structures among otherwise highly attractive hotels.

”Legacy pandemic-era sector disruption led to a backlog of sellers that deferred exits awaiting market stabilisation. At the same time, the specialist operational acumen required to manage hotels limits competition among mid-market assets.

”Together, these market dynamics create market pricing dislocation, opening the door for specialist hospitality investors like us to capitalise on, as travel demand for business and leisure recovers.”

Lorenzo Guidi, executive director at Banor Capital, said: “We believe legacy headwinds has created market dislocation in pockets of the European hospitality sector presenting compelling risk-adjusted investment opportunities for investors with the right mix of operational acumen, asset management and debt restructuring expertise.”

Guidi added that the joint venture will identify ”fundamentally sound hotels with challenged capital structures, resolve the financial complexity, reposition assets and unlock the growth potential”.  

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