European hostel chain a&o Hostels has completed an €874m refinancing facility provided by funds managed by Apollo.
The senior multi-year loan, which is secured against the firm’s portfolio of 44 hostels located across 32 European business and leisure hubs, replaces an existing facility with Apollo and will enable a&o to deliver on the next, €500m phase of its ambitious growth strategy in its core markets.
StepStone Group and Proprium Capital Partners sponsored the management-led acquisition of a&o at the end of 2023, enabling the hostel chain to undertake an initial €500m platform expansion programme.
Over the past 24 months, a&o has acquired approximately 11,500 beds and has approximately 30,000 beds under management.
Josh Cleveland, head of EMEA at StepStone Real Estate, said: “Owners and the management team have built something exceptional at a&o, growing the platform at pace while maintaining real discipline. Apollo’s commitment to extending this relationship on competitive terms is a strong endorsement of the strategy – and of the partner group delivering it.”
Philipp Westermann, partner at Proprium Capital Partners, added: “Despite its highly defensive characteristics and outperformance in recent years, underpinned by the attractive income profile, the hostels sector remains fragmented. This facility provides us with the firepower to capitalise on this opportunity and rapidly scale the platform, through both asset and corporate acquisitions, alongside a long-term financing partner with a shared conviction in the sector’s fundamentals.”
Ben Eppley, partner and head of real estate credit, Europe, at Apollo, said: “A&o has executed on its accelerated growth strategy ahead of schedule whilst remaining highly disciplined. This transaction, in a sector benefitting from attractive compelling demographic and technological tailwinds, continues our track record in Europe of providing scaled financing alongside leading sponsors seeking holistic portfolio solutions.”
