Internos Global Investors has raised about $150 million for a European hotel real estate fund. According to IPE Real Estate, seven German institutional investors supported the initiative, the manager's second for the hospitality sector.
The fund has $292.83 million to invest with leverage. Internos said it could increase the fund to $563.14 million over the next few years. The fund will target value-add investments from three- and four-star business hotels in city centers.
Established in 2012, the core fund Hotel Fund I gained $563.14 million in managed assets. The fund achieved a 14 percent internal rate of return. Jochen Schaefer-Suren, partner and manager of Internos' hotel and leisure division, told IPE Real Estate that the hospitality sector is at a point where many hotels with long-term fixed income are "fully valued in many markets, yet may face rising interest rates and resulting potential value impact over the coming years. In such markets, the new strategy focuses on creating value at the individual asset and market level, which can be achieved in any general market context."
Internos added that many hotels are under exclusivity or in advanced discussions. The company will use the initial funds over the next 12 to 18 months.
This announcement follows Internos’ completed acquisition of the four-star Exe Danube Budapest in Hungary for $16.61 million from Hungarian developer Sunbelt in February 2017. The 101-room boutique hotel was well into the development phase when Internos secured the property contractually in spring 2016. The purchase was part of the company’s Hotel Real Value Plus “Value Add” mandate through the Master-KVG from Institutional Investment partners.