Catalyst Capital has kicked off a new €250m European hotel investment strategy with the acquisition of prime property in Lisbon. Catalyst has acquired the former Diplomatico Hotel in Rua Castilho in the city centre from a family office for €14.75m for its Catalyst Core Plus European Property Fund (CCPEPF), a €1.3bn evergreen real estate fund.
Catalyst will invest around €9m 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.
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”.