UK: Queensgate Investments, a private equity real estate fund manager, is to buy Generator Hostels from Patron Capital and its co-investor Invest Real Estate.
Generator, the design-led hostel owner and operator, has been acquired by Queensgate Investments Fund II LP, which is managed by Queensgate Investments, a private equity real estate fund manager. The vendor was Patron Capital, a pan-European institutional investor focused on property backed investments, and its co-investment partner, Invesco Real Estate, a global real estate manager.
The €450 million transaction has an enterprise value of circa and is expected to complete in May.
Generator Hostels, which was held in Patron Capital’s Fund III, owns 14 predominantly freehold assets (12 operational and two under development), totalling 8,639 beds, located in London, Paris, Copenhagen, Amsterdam, Miami, Dublin, Hamburg, Barcelona, Berlin Mitte, Stockholm, Madrid, Venice, Berlin Prenzlauer Berg and Rome. Earning current revenues of over €70 million, Generator Hostels targets the fast-growing sector of millennial customers, focusing on the best capital city addresses, design-led interiors, a safe environment and, most of all, attractive shared social spaces.
Queensgate Investments intends to own the portfolio for the long term, enhance operations for customers, and invest in excess of €300m into adding more hostel assets.
Keith Breslauer, managing director of Patron, said: “Generator has performed strongly under Patron’s ownership, during which time we have expanded the business significantly from just two hostels to 14, and have redefined the hostel concept into the design-led hospitality experience that today’s guests want. We are very pleased to have sold Generator to Queensgate, and are confident that the business will continue to grow and thrive under their stewardship.”
Jason Kow, CEO of Queensgate Investments, said: “Generator Hostels represents high-quality freehold assets, robust revenues, an attractive lifestyle brand, and material scalability opportunities. Generator Hostels plays to Queensgate’s strengths of working with incumbent management to improve the customer experience, to streamline operations and to bolt on additional assets to this impressive platform.”
Patron was advised by Lazard and CMS; Queensgate was advised by Brown Rudnick. Invesco Real Estate was represented by Freshfields.