Internos announces first closing of Internos Hotel Real Estate Fund (DE/NL)
Wednesday 4 July 2012
Internos has announced the first closing of the Internos Hotel Real Estate Fund with initial equity of €75 million from four German institutional investors.
Internos has also exchanged contracts for the purchase of its four hotels strong seed portfolio with a total investment of over €100 million with related debt provided by Bayern LB. The hotels are three- to four-star hotels with a long, stable trading record, located in major cities in Germany and the Netherlands and operated by three different major hotel groups under long leases.
The locations in the core Eurozone, high stable income, diversification and conservative debt of 40% contribute to the low risk profile and reflect Internos’ strategy for institutional, core investors in today’s risk averse market. The portfolio’s pricing and low interest rates lead to forecast dividend yields and IRRs of 7.5+% net and 11+% respectively.
The Fund is structured as a German ‘Spezial Fonds’ operated by Internos’ Kapital Anlage Gesellschaft (KAG). Internos expects to raise additional equity for the fund to reach AUM of up to €300 million in order to acquire several hotels which are under detailed negotiations. The Fund will be managed by Jochen Schaefer-Suren, Partner in charge of Internos’ Hotel & Leisure division as well as Paul Muno and the remaining Internos KAG team in Germany.
Jochen Schaefer-Suren commented: “To be successful we knew we had to design a, ‘core’ hotel investment strategy and thus even more conservative than in the past, i.e. exclusively focused on the core Eurozone, stronger tenants and existing stabilized hotels, with a very conservative, 40% LTV financing yet still offer attractive returns.
“We also structured it as a club deal with German institutions with the right tax and regulatory structure, i.e. a KAG, with well-aligned interests and investor control.”
Jos Short, Executive Chairman of Internos, added: “By reaching first close of our maiden hotel fund in a very challenging fund raising environment, we have passed a critical milestone in the funds development. With the all-important ‘first close’ now behind us, we can look forward to raising further equity once the initial tranche is fully invested in line with our core strategy.
“With our new KAG platform in place, we are in a strong position to meet the demand from institutional investors for club deals in ‘Spezialfonds’ structures, offering various strategies across a range of products.”