Special investment fund KD Adriatic Value Fund, managed by KD Funds in partnership with Peakside Capital, has acquired the Austria Trend Hotel in Slovenia from CA Immo.
Financial details were not disclosed, but the deal was understood to be around the low double digit million euro mark.
Regarded as the first regulated real estate alternative investment fund (AIF) in Slovenia, the fund has already acquired three other assets across its target geographies of Slovenia, Croatia and Serbia since April 2018.
These comprised the Tivoli Centre office building and the south wing of the Stekleni dvor office complex in Ljubljana, as well as the Arkadia shopping centre in Domžale acquired for €16.2 mln. The latest deal represents the fund’s first hotel investment to date.
‘There isn’t a large hotels market in Ljubljana, but we were so compelled by this opportunity that we felt it would be a very good addition to the fund and also provide diversification,’ Stefan Aumann, founding partner of Peakside Capital, told PropertyEU. According to management, the fund’s initial remit was for offices and retail. ‘In terms of asset class selection, this was more opportunistic.’
‘With the acquisition of the Austria Trend Hotel, KD Adriatic Value Fund is strengthening its core business and expanding its real estate investment portfolio to include the hospitality sector. This is in line with our strategy of offering SEE real estate as an attractive asset for institutional investors,’ said Luka Podlogar of KD Funds.
‘The hotel is well recognised by tourists and business guests in Ljubljana. With its excellent location, visibility and building structure it has a great potential for further growth together with the whole Slovenian hospitality sector,’ added Tomasz Niezgodzki of Peakside.
Located in the Slovenian capital of Ljubljana, the Austria Trend Hotel comprises 214 rooms plus amenities including a restaurant, spa and wellness centre, and 11 conference rooms.
Regional potential
According to Aumann, the three target countries of Slovenia, Croatia and Serbia offer a relatively undeveloped real estate sector and attractive returns, whilst the long-term success of the fund is likely to be supported by economic growth in the region.
‘Slovenia is not a large country, which is a plus and minus,’ Aumann said. ‘The drawback is that there is not a lot of interest from large investors, but that is in itself a plus because it is not as overcrowded as almost all the other markets in Europe. So, you can still acquire assets at very attractive yields.
‘Slovenia experienced recession about 10 years ago, but it has come back very nicely. So we are equally pleased with both its economic and real estate development trends. We’re now seeing rental growth in our office assets in the region.’
Niche focus
The KD Funds venture is another proof that Peakside is exploring more ‘niche’ products, Aumann confirmed. A few months ago, the firm announced an innovative venture with Brickblock to create a first-of-its-kind investment vehicle that uses blockchain technology to ‘tokenise’ funds. The idea is to capitalise on rapidly evolving technologies and capture a different investor profile in Germany.
‘The token fund will be a core, core plus fund targeting a broader investor audience,’ Aumann said. The Slovenia fund is also exploring an alternative investor base. You could say we’re thinking outside the box.’
The fourth investment for the fund brings the total capital deployed so far to almost €60 mln, exceeding its original estimates of some €50 mln buying power.
