International hospitality real estate owner and operator PPHE Hotel Group has launched a new European investment fund targeting up to €250 mln of equity.
The European Hospitality Real Estate Fund will have an initial term of seven years and focus primarily on value-add hotel investments, starting with a seed asset in Rome.
PPHE said it had signed up Clal Insurance as a cornerstone investor for the vehicle, which is subject to regulatory approval. The Israeli insurer has committed up to €75 mln, paying an initial €28.1 mln in cash for an initial 49% stake in the fund.
For its part, PPHE will invest up to €50 mln in cash and/or assets, leaving the remaining €125 mln of targeted equity open to other investors. The hotel group said that with full equity subscription and combined with a targeted 50% bank leverage, the fund’s investment potential will be around €500 mln.
Initially, PPHE and Clal will participate in the fund on a 51-49% basis. PPHE will contribute its existing Rome asset to the vehicle for an agreed value of €29.3 mln. Hotels acquired by the fund in future will be run by PPHE’s hospitality operating platform.
PPHE earlier teamed up with Clal Insurance on two London hotel assets.
