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Generator Hostels secures EUR60m of growth capital from Invesco

Patron Capital is selling a minority stake of up to 23 per cent of its portfolio company Generator to Invesco Ltd in exchange for up to EUR60m of growth capital.

Invesco’s stake in Generator is the inaugural investment by Invesco’s second opportunistic strategy, focussed on real-estate-related investments in both the US and Europe and co-managed by Invesco Real Estate, WL Ross & Co, and Invesco Fixed Income.
 
The capital will be used to increase the number of Generator properties across the globe. The chain currently has 5,200 beds in eight properties across Europe, a number that will near 7,000 by 2015, after three confirmed openings in Paris, Rome and the recently announced Amsterdam. The group expects to grow the portfolio to 20 properties by 2018, including a number of European cities and at least three cities in the US.
 
Josh Wyatt, senior advisor at Patron Capital responsible for the Generator brand, and chief strategic officer at Generator, says: “This transaction, via a global institutional capital partner, is a major proof of concept for hostels as an asset class and confirms Generator as a pioneer in this new breed of accommodation and a brand with a bright global future. Since Patron acquired Generator in 2007, Generator has built a powerful global brand and revolutionised the hostel experience. The EUR60 million of proceeds will enable the company to accelerate its growth plans both in Europe and the US, where we believe there is significant potential.”
 
Bert Crouch, senior director, Invesco Real Estate, says: “We are delighted with our first investment in Europe within our new opportunistic strategy and are equally optimistic about the partnership with Patron Capital. With the Generator brand, Patron has created what we believe is the leading pan-European hostel platform with significant potential for near-term expansion in Europe and beyond. More broadly speaking, we look forward to increasing our opportunistic exposure in Europe by aligning with best-in-class investors and operators in the marketplace, such as Patron.”
 
Erik Jacobs, director, hotel fund management, Invesco Real Estate, says: “Through Invesco’s opportunistic strategy we are now extending our commitment to the hospitality industry beyond the traditional lease model. We are excited to be investing in the Generator platform as we see strong fundamentals supporting the hostel segment, and Generator is a market leader in terms of product, design and brand recognition. As an organisation, we look forward to assisting Patron with Generator’s ongoing growth by utilising Invesco’s extensive global network.”

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