Internos Real Investors is making 'good progress' in pursuing transactions for its two-pronged hotel investment strategy, the company's head of Hotels & Leisure Jochen Schaefer-Suren told PropertyEU in an interview. ‘If things go well, by the end of next year we could have EUR 300-400 mln under management and EUR 1 bn in three years' time,' he said.
Internos Real Investors is making 'good progress' in pursuing transactions for its two-pronged hotel investment strategy, the company's head of Hotels & Leisure Jochen Schaefer-Suren told PropertyEU in an interview. ‘If things go well, by the end of next year we could have EUR 300-400 mln under management and EUR 1 bn in three years' time,' he said.
Schaefer-Suren joined Internos in January from Invesco where he was head of hotel fund management. Internos' hotel strategy focuses on institutional, 'core' low risk, income-focused investments on the one hand, and a more opportunistic strategy favouring cyclical hotel plays on the other.
The first product is geared towards institutions like insurance companies and pension funds and is similar to the fund concept Schaefer-Suren designed when he established the hotel business at Invesco. But Schaefer-Suren stressed that there are crucial differences between the products being developed by Internos and the initial hotel fund concept that he developed at Invesco, which was pan-European.
Contrary to other hotel funds marketed as 'core' products, Schaefer-Suren believes institutional investors should not go up the risk curve by investing in management contracts or in hotels outside the core Eurozone countries - let alone outside the Eurozone. Indeed Spain, Italy, Greece, Portugal and Ireland are countries where country risks as reflected in local government bond yields are not properly reflected in real estate markets which are thus mispriced. 'After a period of denial of country risk we are back to proper country risk premia,' he noted.
Institutional investors seeking an alternative to management contracts can take more risk within leases, Schaefer-Suren noted. 'We are structuring leases with fixed, turnover and profit-related rent; so you can create structures with risk within them and you don’t need to assume management contracts. This also ensures the various business risks of hotels remain with operators whilst sharing some of the financial risk via hybrid leases. We are not opposed to management contracts but even those with guarantees are for value added, opportunistic, not core investors'.
Alongside the core income strategy Internos has an opportunistic product for 'innovative private equity-type' hotel investors. In this context, Schaefer-Suren is currently working on the recapitalisation of a hotel portfolio.
He declined to give more details but said such deals were best suited for structuring as separate accounts for a single institutional investor or as club deals.
