Queensgate completes €600m Generator restructure

React News

What Queensgate has agreed a €600m restructure of its Generator Group hostels business Why Apollo Global Management has provided an additional €100m to the previous structure What next The owners anticipate their Millennial and Generation Z target market will quickly return as customers

Queensgate Investments has completed its €600m restructure of its Generator Group trans-Atlantic hostels platform, React News can reveal.

The leisure specialist has drawn in an additional €100m of finance from Apollo Global Management in order to shore up it position as a result of the pandemic in a deal first tipped by React News last October.

An existing €500m of debt from lenders HSBC, Société Générale and Aareal Bank has also been refinanced.

The conclusion of the deal will now allow the company to focus on the anticipated recovery in the sector as vaccination rates tick up throughout Europe and the US with its younger generation target market expected to be willing to start travelling again quickly once restrictions ease.

Generator operates 19 city centre hotels, of which it owns the freeholds of 17, totalling 3,194 rooms and 11,390 beds. The hotels are independently branded and operated by a fully integrated hotel management team.

Queensgate acquired Generator in 2017 from Patron Capital for €450m. At that time it had 12 locations and it is now operational in locations including Amsterdam, Barcelona, Berlin, Copenhagen, Dublin, Hamburg, London, Madrid, Miami, Paris, Rome, Stockholm, Venice and Washington DC.

In 2019 Queensgate also purchased Freehand, which owned four hotels in New York, Miami Brach, Los Angeles and Chicago totalling 922 rooms for around $400m from The Yucaipa Cos and Sydell Group and integrated them into the platform.

Generator forms part of Queensgate’s broader £3bn portfolio, which also includes Grange, which it refinanced last year, and the Kensington Forum, which is currently up for sale for £400m.

Jason Kow, chief executive of Queensgate, said: “Queensgate Investments is proud to have completed the restructure of the largest multi-jurisdictional financings during the COVID pandemic to support one of the most exciting asset-backed hospitality platforms on the street.”

“With the Millennial and Generator Z customer base, we are confident of a rapid and resilient recovery once travel restrictions are lifted.”

Skardon Baker, senior partner at Apollo, added: “This transaction showcased the breadth of Apollo’s expertise with respect to offering well-structured, asset backed capital solutions for complex recapitalization and restructuring transactions. We were pleased to provide Queensgate with a creative financing solution for a diverse portfolio of hospitality assets.”

Ivo Kolev, partner at Apollo, said: “We are pleased to have worked with Generator’s sponsor, creditors and management team to ensure an appropriate capital base addressing the operational and earnings dislocation of the current COVID- 19 pandemic and look forward to working with the company as it goes through this challenging operating environment.”