EUROPE - Invesco Real Estate has identified a €168m seed portfolio of hotels to help raise capital for its new pan-European hotel fund.
The fund manager has been active in the hotel market this year, acquiring a number of assets for its first hotel fund, which raised €350m from institutional investors in 2006.
The fund now owns a portfolio of 16 hotels across nine European countries with a gross asset value of more than €650m, almost a third of which was bought this year.
Invesco is continuing to back the sector, which fell out of fashion with investors during the financial crisis, with the launch of a follow-up fund.
Simon Redman, head of product management at Invesco Real Estate, said: "Hotels are part of a strategic growth sector, providing a stable income product underpinned by strong covenants and rental guarantees.
"The branded hotel market is a growth sector, and such hotels are more fundable, saleable and offer stable high income potential."
The new fund will continue to focus on modern, mid-market hotels near city centres, airports and convention centres in the euro-zone with long leases and operated by established national or international operators.
Invesco has secured an exclusivity agreement to purchase the seed portfolio through its relationships with major international hotel operators.
"With low brand penetration in Europe, this provides opportunities for consolidation within the sector and opportunities for institutional investors wanting to invest into this alternative real estate," Redman added.
"We are pleased to be able to provide institutional investors with access to this specialist real estate asset class via our team of six hotel sector specialists.
"Timing is optimal for hotel investment activity, as asset pricing remains low, while hotel trading has shown strong signs of improvement across Europe."