Aareal grows exposure to hospitality with €566m refinancing

The loan, provided alongside two other banks, is secured against a cross-border portfolio.

German lender Aareal Bank has increased its presence in the European hospitality sector by arranging and participating in a €566 million loan to The Social Hub, a hotel chain founded by Scottish businessman Charlie MacGregor.

The senior facility was provided with Dutch bank Rabobank and an unidentified third lender. The loan is classified as a green loan under Aareal’s green finance framework. The portfolio consists of 13 properties, comprising 7,000 rooms in the Netherlands, Spain, France and the UK. The Social Hub is aiming to add a further 3,000 rooms to its portfolio.

“Hospitality has always been a key interest for the bank; we currently finance approximately €11 billion in hotel loans across 20 countries,” Michelle Weiss, head of hotel properties at Aareal, told Real Estate Capital Europe. “It has proven to be a resilient sector and we continue to believe in its healthy long-term fundamentals.”

MacGregor, chief executive officer of The Social Hub, said the firm’s “hybrid model” had proved itself by attracting the confidence of lenders. The Social Hub, previously known as The Student Hotel, provides amenities including co-working space and student accommodation alongside its hotel offering.

“The successful refinancing of our portfolio will allow us to further invest in the growth and quality of our platform across Europe, with upcoming hotel openings in San Sebastian, Glasgow, Rome, Florence and Porto in the coming 18 months,” added MacGregor.

Aareal has provided several large loans in the hospitality sector in recent years. In September, the bank issued a €210 million senior loan backed by a four-star hotel in Paris. The loan was provided to refinance private real estate manager Henderson Park’s ownership of Le Méridien Etoile, located in Paris – close to the conference and events venue, Palais des Congrès.

The hospitality sector has picked up traction with lenders in recent months as it continues to recover from the slump brought on by the covid-19 pandemic. In March, real estate consultant CBRE said the hospitality sector had seen a boom due to pent-up demand as consumers reacted to the global easing of travel restrictions. It added that the sector was on target to matching its pre-pandemic performances in 2023.

Earlier this month, the sector saw one of the largest refinancings of the year, when UK-headquartered private equity firm Queensgate Investments sourced a €762 million refinancing of its European and US hospitality business, Generator Group.

The refinancing, which reflected a 62 percent loan-to-value ratio, was secured against Generator’s portfolio of upmarket hostels and affordable boutique hotels, which are operated under the Generator hostels brand in Europe and the Freehand brand in the US. The portfolio contains 21 properties, with 12,000 beds across 17 cities.

In the same month, London-based credit specialist Veld Capital originated a €63 million loan to specialist hospitality operator Gr8 Hotels for its hotel portfolio in the Netherlands. The loan is understood to be one of Veld’s largest transactions.