Investment manager Invesco Real Estate (IRE) has closed the €530 mln acquisition of a hotel portfolio in one of 2017's largest European hotel transactions.
The package, which includes a total of 13 hotels across Germany and the Netherlands, was bought on behalf of Invesco’s newly established open-ended European hotel fund and two separate account mandates.
IRE’s new fund, which launched in July with an initial equity commitment of €179.5 mln from 10 institutional investors, is acquiring 38% of the portfolio (four hotels), while a long-standing UK separate account mandate is taking 26% or a total of eight hotels. A joint venture in the form of a new separate account mandate with a Danish and Dutch institutional investor is acquiring the remaining 36% of the portfolio.
IRE acquired the portfolio from funds managed by Apollo Global Management.
Marc Socker, managing director of Hotel Fund Management at IRE, said the deal marks the entry of new investors into Invesco's European funds, adding that many of them 'are taking their first steps into the European hotel real estate sector'.
'It is encouraging to see increased interest from institutional investors in hotels,' added Socker.
Mid-market hotels
Around 85% of the portfolio is in locations across Germany (Berlin, Cologne, Dortmund, Düsseldorf, Frankfurt, Hamburg, Heidelberg and Munich) with the remaining 15% in Amsterdam. The portfolio is made up of mid-market hotels in city centres.
Invesco has entered into a joint venture agreement with Event Hotels for the day-to-day operational management of the assets. All assets are franchised under IHG brands such as Crowne Plaza, Holiday Inn and Holiday Inn Express.
Andy Rofe, managing director at IRE added: 'In 2017 we have already transacted or have in the pipeline €900 mln of transactions for the new fund and our growing portfolio of separate accounts. In our view, hotels are now seen as mainstream real estate investments.'
IRE was advised by Paul Hastings and PWC. Apollo Global management was advised by Eastdil Secured.
New hotel fund
Targeting a 6%-7% per annum gross income return, Invesco's new fund launched with a €200 mln seed portfolio of four assets in the Netherlands and Germany, with a view to growing the fund to €500 mln in the first two years.
The launch represented the third IRE fund to focus on hotels, but is the first to be open-ended.
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