Global vertically integrated real estate company Sonae Sierra (Sierra) has collaborated with PGIM’s real estate investment arm PGIM Real Estate to introduce a new investment platform for hospitality value-add opportunities.  

The companies will form a joint venture (JV), which will leverage the expertise of the operational management team at Iberian Hospitality Solutions (IHSP) under the leadership of Goncalo Batalha. 

This partnership is expected to target a gross asset value (GAV) of €200m ($217m) by focusing on acquiring and managing hotels in prime leisure destinations. 

PGIM Real Estate is participating in the JV through its European value-added strategy. 

This collaboration is also a significant part of Sierra’s diversification strategy, which aims to expand the company’s footprint into the hospitality sector and focus on value-added hospitality assets.  

The JV’s main approach is to seek out sizeable hotels in established leisure destinations and implement strategies to enhance their value.  

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Under this partnership, the companies have made their first acquisition, an upper upscale hotel located in central Porto.  

The hotel’s prime location, within walking distance from some of the city’s main attractions, positions it to become a key player in the city’s tourism market upon its opening in the latter half of this year. 

PGIM Real Estate France, Spain and Portugal head Nabil Mabed said: “The hotel leisure market has long been a fundamental sector for the Iberian economy. Portugal is a top Southern European hospitality market, attracting a growing international demand, with significant upside to be captured if the quality of supply is upgraded to meet the international demand requirements.  

“In the current environment, investors look for value accretive, inflation hedged and cash-flowing investments to deliver attractive returns. Our strategy aims to consolidate local players and improve the quality of the offering to guests. Our partnership with Sonae Sierra and IHSP and the acquisition of the first hotel in Porto, endorses our positive outlook for the area and the strategy deployed.”