Azora Makes €680M Long-Term Bet On European Tourism

By Elise Hansen
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Law360 (July 27, 2020, 3:12 PM EDT) -- European private equity firm Azora said Monday it raised €680 million ($799 million) for a fund focused on leisure hotels and tourism, an industry the firm believes will rebound from the COVID-19 pandemic.

Azora European Hotel & Lodging FCR surpassed its original fundraising target of €600 million, the firm's announcement said. Azora EH&L plans to focus on European "sun and beach" tourist destinations as well as urban tourism — segments that have been hit hard by the pandemic but that the firm believes are an attractive long-term bet, according to the statement.

"Azora believes that regardless of the short-term impact of the COVID-19 crisis, the European hotel market represents a compelling opportunity underpinned by attractive supply-demand dynamics," the announcement said. "Furthermore, it is a highly fragmented market which has attracted limited institutional capital investment to date."

Azora is a real estate investment and asset management firm that bills itself as the first institutional investor of its kind to enter the "sun and beach hotel" segment. The firm said it sees significant opportunity for institutional investors to become more involved in European hospitality markets.

About 62% of European hotels are independently owned, compared to about 30% in the U.S., according to the announcement.

Azora has already secured a 10-hotel portfolio of properties on coastal resorts in Spain, Ibiza and Sicily, and four hotels in city centers of Madrid, Lisbon, Brussels and Bilbao, the announcement said. The coastal hotels total 2,800 units and the urban hotels have a total of 1,200 beds, Azora said.

The fund attracted investors such as pension funds, sovereign wealth funds and a global institutional investor, the announcement said.

Investors may provide co-investment capital alongside their commitments to the fund, potentially increasing the fund's investment abilities, Azora said.

A previous Azora fund, Hispania, amassed a portfolio of 46 Spanish hotels that it sold to Blackstone in 2019, according to Monday's statement. Hispania's portfolio included seven hotels in the Canary and Balearic Islands that it bought from British private equity shop Alchemy Partners in 2017 for €165 million.

Other recent deals in the European hospitality space include Covivio Hotels' €600 million agreement to purchase eight hotels located in France, Italy, the Czech Republic and Hungary; and Aurelius Equity Opportunities' deal to sell a hotel subsidiary to German company Art-Invest Real Estate Group at a €63 million enterprise value.

Representatives for Azora did not immediately respond to a request for comment Monday. Counsel information was not immediately available.

--Additional reporting by Andrew McIntyre, Benjamin Horney and Alyssa Aquino. Editing by Alyssa Miller.

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