Are we about to see core capital flood into the hotel sector? Maybe, maybe not, but M&G Real Estate’s acquisition of the Travelodge Poblenou Hotel in Barcelona for circa €50 million shows that open-ended funds can still invest in hotels.
The deal, on behalf of the €4.8 billion M&G European Property Fund, is its first dedicated hotel acquisition, reflecting a selective approach to entering new sectors where strong fundamentals and long leases support long term performance.
Historically open-ended funds like M&G’s have favoured assets with predictable cashflows such as office leases, not operationally intensive businesses like hotels.
There are exceptions however, especially where you have a long-term tenant in a supply constrained city lie Barcelona.
Barcelona is one of Europe’s most visited cities. Hotels in the city are set to benefit from sustained occupancy and long term pricing power, due to strict planning regulations limiting new hotel development and the planned ban on short-term rentals from 2028.
The 250-room hotel is operated by Travelodge Hoteles España S.L. under a long term lease.
What they said
Simon Ellis, Fund Manager of the M&G European Property Fund, said: “In a more uncertain global environment, we’re focused on assets that can deliver steady, dependable income over the long term. Hospitality plays an important supporting role in a diversified real estate portfolio, giving us exposure to sectors driven by tourism, business travel and city growth. When backed by strong fundamentals, long leases and solid sustainability credentials, assets like Travelodge Poblenou show how we can add resilience and diversify across both regions and asset classes.”
Federico Bros, Director of Investments & Asset Management for Iberia at M&G Real Estate, added: “Acquiring a rare, institutionally leased hotel in one of Europe’s most supply constrained hospitality markets is a unique opportunity for our Iberian portfolio. Together with our recent living transactions in Spain, we now manage circa €1.2 billion of assets across logistics, living, retail, office and hospitality in Iberia, reinforcing our diversified footprint across the region.”