In year where transactions continue to crawl on at snail pace, it seems Pygmalion has its own big plans, plans which will hopefully aid total European transaction volumes for 2024.
In an exclusive interview with Christophe Beauvilain, the managing partner of Pygmalion Capital revealed to Hospitality Investor that the special situations European hotel investment specialist is currently working on two large portfolio transactions across various countries in Europe.
Big moves
“We’re working on two significant transactions for around €150 million across Southern Europe,” Beauvilain stated, adding that in terms of markets, in addition to being very active in Italy, the company is starting to see “a good amount of opportunities” in France as well.
“We are looking at assets where maybe owners have a need for a quick funding solution, where maybe developers are struggling to finalize projects, we are also open to providing mezzanine financing. We try to be solution providers in difficult situations where the relationship has broken down between the lender and the borrower, or even the courts or insolvency administrators are getting involved. We're active on a couple of fronts there,” he says.
Part 'two'
He also notes the company is also looking at a new investment vehicle in 2024 following the strong performance to date of Pygmalion European Hotel Opportunities Fund II which closed in 2021. Pygmalion European Hotel Opportunities Fund managed to acquire really good assets in Florence, Italy at very attractive pricing.
“We have spent capex on the assets, we have restructured some of the operations to make them more efficient and we have restructured as well on the F&B side. We have been quite active in terms of asset management, so this is tracking to very interesting attractive returns for our investors. In the next 12 months, we'll be looking to potentially exit the position,” Beauvilain says.
Turning to the present, he acknowledges the challenging fundraising environment but expresses confidence in Pygmalion's strong track record, experience, and robust sourcing pipeline.
“Fundraising has been very challenging for the real estate private equity industry. I wouldn’t say the environment is really supportive for fundraising but offering a differentiated dedicated European Hotel investment strategy.”
ESG
Pygmalion also has plans for its portfolio in terms of ESG improvements, a necessity in a period where there has been more regulation around and focus on environmental concerns in the hotel sector.
“In Spain, we have a large portfolio of nine hotels where we have spent significant ESG capex specifically to electrify the portfolio and significantly reduce the asset’s carbon footprints. We do this because it makes financial sense - it's a very high return on investment in terms of the ability to generate electricity in much cleaner ways. We are also doing the same - slightly different but similar – across our portfolio in Italy,” Beauvilain states.
Despite a slow market, it seems Pygmalion’s approach will allow the firm to source and execute on hotel transactions despite a slower overall European hotel transaction landscape.