REAL ESTATE - Noble Investment Group has raised $310m (€233.1m) of equity for its hotel investment fund called Noble Hospitality Fund.

This commingled fund will be the first time that the company has raised a discretionary investment fund from institutional investors, with a consultancy firm being given first shot at offering it exclusively to the firm’s clients

Rodney Williams, chief investment officer, said: "This is the next logical step for our company. In the recent past we have worked with opportunity fund managers on some select acquisition opportunities." This includes companies like Lubert-Adler Investment Management and AEW Capital Management.

There were a total of seven institutional investors in the fund. One of these with a $25m commitment was the Los Angeles Fire & Police Pension System. The pension fund made this commitment through its real estate consultant, The Townsend Group.

This consultant was given the first option of having all of the investors in the fund being Townsend clients, with the outcome that only one or two of the investors were not Townsend clients.

Noble has a solid track record in investing in hotel properties. The company has realised and unrealised gross returns from its previous investments have generated a 27.3% gross IRR and an equity multiple of 2.7x.

Noble brought in Lubert-Adler as a co-sponsor of the commingled fund. Both companies made a co-investment to the fund, in Noble ‘s case $8m and Lubert-Adler’s, $47m. The projected returns for investors in the fund are a 20% gross IRR and a 15% net IRR.

The real estate manager feels very good about the future prospects of the hotel investment market. Williams said: "We think that the performance of hotels looks very strong for the next two to three years. There will be no construction boom during that time because of the high costs of materials and land for new development. This will make the existing hotel properties perform at a higher level."

There are no assets in the Noble Hospitality Fund at this time. The fund has a three-year investment period to find all of the assets and will be looking at a variety of deals.

Williams added: "The commingled fund will have 65% of the deals being the purchase of existing assets and 35% being new development projects. Any current assets acquired will be improve by making physical changes, re-branding or re-configuring existing space."

All of the investments for the commingled fund will be with properties in North America covering the US, Canada, Mexico and Puerto Rico. The assets will all be full-service hotels. The preferred brands include Starwood, Marriott, Hyatt and Hilton.