Schroder Real Estate’s hotel investment arm, which seeks a €500m fundraise for its debut European fund, has so far raised €425m.

The asset manager said the Schroder European Operating Hotels Fund I fund has received a further €125m in capital commitments in addition to the previously announced initial €300m raised in January.

The fund is expected to have a final close in the fourth quarter of 2020 and with 40% leverage is expected to invest €800m of capital in hotel real estate.

Schroders said the majority of capital to date has been committed by some of Europe’s largest insurance companies.

Frederic de Brem, head of Schroder Real Estate Hotels, said: “While the leisure and hospitality market has been hit hard by the global pandemic, we strongly believe that this will create some attractive opportunities.

“As a team which has completed more than 150 acquisitions and disposals over almost 20 years together, we have the experience and, with the fund’s three-year investment period, the time to be patient and deploy the €700m of dry powder (including debt) very judiciously to create a high-quality diversified portfolio of hotels across some of Western Europe’s top business and leisure destinations.”

Robin Hubbard, head of real estate capital, Schroders, said: “It is testament to the team’s track record that we have already been able to raise 85% of the target equity for a ‘first-time’ fund in just over six months, including recent closes during the worst of the lockdown. A final close is expected in the fourth quarter of 2020.”

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