North Wind and Banor launch £500m hospitality fund

Investors North Wind Capital and Banor Capital are planning to launch a £500m, pan-European hospitality fund through a joint venture, as the duo seeks to take advantage of pricing dislocation. The jv will target small and mid-sized hotels in distressed capital structures. It aims to assemble a portfolio with a gross asset value of around £500m, with a focus on the UK, southern Europe and Italy. NWC has initially committed £25m to co-invest alongside Banor Capital, which will match NWC’s investments in the joint transactions to total £50m. The investment strategy will target hotels with multiple demand drivers, branding potential and value-add opportunities that are burdened by distressed capital structures or managed by inefficient operators. Those will include hotels that are “over-encumbered by debt and capex-starved” after the pandemic, said the jv in a joint statement. Asset business plans will involve capital structure stabilisation, targeted capex investment and performance improvement by implementing operational efficiencies and rebranding. The jv will source assets off the market through its combined investor network. Ben Williams, chief executive at North Wind Capital, said: “High interest rates have disproportionately hurt hospitality businesses. “Many hotels accrued additional indebtedness to navigate trading conditions during Covid, creating broken capital structures among otherwise highly attractive hotels. Legacy pandemic-era sector disruption led to a backlog of sellers that deferred exits awaiting market stabilisation. “At the same time, the specialist operational acumen required to manage hotels limits competition among mid-market assets. Together, these market dynamics create market pricing dislocation, opening the door for specialist hospitality investors like us to capitalise on, as travel demand for business and leisure recovers.” Lorenzo Guidi, executive director at Banor Capital, said: “We believe legacy headwinds have created market dislocation in pockets of the European hospitality sector, presenting compelling risk-adjusted investment opportunities for investors with the right mix of operational acumen, asset management and debt restructuring expertise. “Our jv will identify fundamentally sound hotels with challenged capital structures, resolve the financial complexity, reposition assets and unlock the growth potential.”