Catalyst Capital, the European real estate investment, development and fund management firm, has kicked off a new €250 million European hotel investment strategy with the acquisition of a prime property in Lisbon.
Catalyst has acquired the former Diplomático Hotel in Rua Castilho in the city centre from a family office for €14.75 million for its Catalyst Core Plus European Property Fund (CCPEPF), a €1.3 billion evergreen real estate fund.
Catalyst will invest around €9 million in a comprehensive refurbishment of the property to provide a 95-room, 4-star boutique hotel. The hotel will be operated by Staycity, the aparthotel operator, under its premium Wilde Aparthotels. The company has signed a 25-year lease with annual, inflation-linked rent uplifts. Catalyst expects to begin the refurbishment next year and complete it in 2023.
Catalyst's 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.
Catalyst was advised by CBRE, which will provide project management services for the refurbishment works, and its legal adviser on the acquisition and ongoing works is RRP Advogados.
Kean Hird, 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 us well during Covid.
"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."
Catalyst has secured further equity commitments from international institutional investors eager to capitalise on opportunities arising from the hospitality sector, investing alongside CCPEPF, which continues to target strong, income-producing assets in every commercial real estate sector, including hotels and infrastructure. CCPEPF expands the value-add strategy Catalyst has successfully executed for more than 20 years.
Geographically, Catalyst will continue to focus on investments in northern Europe and the Iberian Peninsula from its offices in London, Paris, Frankfurt and Warsaw.