StepStone and Proprium’s a&o Hostels acquires former office in central Berlin for conversion into Europe’s largest hostel

March 3rd, 2026 – a&o Hostels (a&o), Europe’s largest and fastest-growing hostel chain with 31,500 beds under management, announces the freehold purchase of a 31,000 sqm vacant office building in a prime central Berlin location, from PIMCO Prime Real Estate on behalf of Allianz.

StepStone Group and Proprium Capital Partners sponsored the management-led acquisition of a&o at the end of 2023 and together they have invested circa €500 million into the platform’s expansion over the last 18 months.

In line with its adaptive reuse strategy, a&o will leverage its in-house development arm to undertake a €40 million conversion programme to deliver Europe’s largest hostel, with c. 2,500 beds.

The transaction extends a&o’s dominant footprint in Berlin, which will total 8,000 beds once the property is complete, a leading tourism & leisure destination where the first a&o hostel opened back in 2000.

Located on Rudi-Dutschke-Straße, in the heart of Berlin’s Kreuzberg tourist district, the completed scheme will total 610 rooms offering a mix of private (31%) and shared (69%) space.

Checkpoint Charlie, one of Berlin’s most iconic and popular tourist attractions, which sees four million visitors annually, is a short walk away, whilst the property’s appeal is further enhanced by its proximity to Berlin’s Central Station (15 minutes’ walk).

Having already been granted a building permit, a&o, alongside ANES Bau, which has been appointed as general contractor, is targeting a Q1 2027 opening date.

The transaction maintains a&o’s pan-European expansion momentum in what is one of Europe’s fastest-growing and most resilient commercial real estate sectors. Increasingly recognised as an institutional asset class, the hostel market is projected to reach €8.2 billion in value by 2029, driven by increasing tourism, a rise in budget-conscious travellers and technological advancements.

a&o’s initial €500 million investment programme has been underpinned by the growing opportunity to convert offices and hotels which have reached the end of their natural life or where the ESG-led capex requirements to bring them up to today’s standards are uneconomic. This strategy has accelerated a&o’s ambition to bring its budget-friendly offering targeting families, school groups and backpackers to more European cities, enabling it to grow by a further 11,000 beds, both operational and being developed / refurbished, over the past 24 months.

Consistently ranking as a top European tourism destination, Berlin has recently benefitted from a significant jump in travellers from other countries, with 11.5% more visitors and 7.3% more overnight stays in 2024 compared with 2023. Kreuzberg is one of its most vibrant neighbourhoods, renowned for its cultural diversity, trendy cafés and varied nightlife. It offers excellent connectivity across the city via the nearby U-Bahn stations, whilst major landmarks including the Brandenburg Gate, Alexanderplatz and Berlinische Galerie are all easily accessible.

Oliver Winter, CEO of a&o Hostels, commented:

“Offering a unique blend of history, culture, modern innovation, green spaces and affordability, Berlin is one of Europe’s leading leisure and tourism hotspots, welcoming 13 million visitors in 2024, a 7.5% increase on 2023. It’s also the city that is synonymous with a&o, having opened our first hostel in Berlin Friedrichshain over 25 years ago.

Leveraging our in-house development capabilities will enable us to deliver another highly sustainable, modern hostel, and the largest in Europe. This landmark investment is a major statement of our ambition, as we continue to drive the rapid growth of the a&o platform. Democratising access to prized urban destinations is a core pillar of our strategy – combining our deep investment and operational expertise and the sector’s favorable tailwinds will drive even stronger overnight stay and revenue performance.”

Philipp Westermann, Partner at Proprium Capital Partners, said:

“We continue to invest in new opportunities at pace and scale, benefitting in particular from the increasing obsolescence challenge facing owners of secondary office and hotel assets.

The European hostel sector remains highly fragmented, which presents a compelling opportunity to harness our proven model, strong digital booking engine, and institutional-grade management infrastructure to further establish our market-leading position.”

Josh Cleveland, Head of EMEA at StepStone Real Estate, added:

“This transaction, which will deliver Europe’s largest hostel, is another demonstration of how we are delivering on our growth strategy ahead of schedule, in one of our high conviction commercial real estate sectors.”

Founded in 2000 by Oliver Winter, a&o is now one of the largest budget hostel chains in the world. 2025 saw a&o Hostels welcome a record 2.8 million guests and 6.6 million overnight stays, achieving an occupancy rate of 76 percent.

Other recent acquisitions have included assets in Manchester, London, Brighton, Brussels, Antwerp, and Heidelberg, as well as the Schulz Hotel platform, while a near-term pipeline of further transactions in other leading European cities continues to be progressed.

ENDS

Enquiries

FTI Consulting
+44 203 727 1000

Dido Laurimore / Richard Gotla
[email protected]

About a&o Hostels

Founded in 2000 by Oliver Winter, a&o Hostels currently operates 44 properties with around 30,000 beds in 29 cities across 10 European countries. A further two properties are set to open in the near future.

The a&o Hostels guest mix is diverse, welcoming backpackers, solo travellers, families, school groups, and associations. The number of business travellers and senior guests is also increasing.

For more information visit:
www.aohostels.com

About StepStone Group

StepStone Group Inc. (Nasdaq: STEP) is a global private markets investment firm focused on providing customized investment solutions and advisory and data services to its clients. As of December 31, 2025, StepStone was responsible for approximately $811 billion of total capital, including $220 billion of assets under management.

StepStone’s clients include some of the world’s largest pension funds, sovereign wealth funds, insurance companies, endowments, foundations, family offices and private wealth clients. StepStone partners with its clients to develop private markets portfolios across private equity, infrastructure, private debt and real estate.

More information:
www.stepstonegroup.com

About Proprium Capital Partners

Proprium Capital Partners, part of L&G, is an established real estate-focused principal investing firm that strategically invests in proven real estate strategies with potential for growth and scalability.

A spin-out of the Morgan Stanley Real Estate Special Situations team, Proprium’s senior management team has worked together for over 20 years investing in scalable real estate operating companies with experienced local partners.

In 2025, L&G acquired a 75% equity stake in Proprium to accelerate growth and unlock new investment opportunities.

Today, Proprium manages $3.3 billion of net assets under management with a global platform of six offices across the US, Europe and Asia Pacific.

Further information:
www.proprium.com

*As of June 30, 2025