New Losan hotel fund to invest EUR 1.6bn over three years

Losan Hotels World has announced it is launching a new fund to acquire EUR 1.6 bn of hotel assets around the world over a three-year period, starting in 2009. The Madrid-based firm owned by César Losada and Spanish banking groups also said on Monday that its first fund closed with a EUR 750 mln portfolio of 15 top-class hotels, providing some 4,200 hotel beds, in main European and American cities. This first fund achieved annual returns of over 45%.

For the new fund, Losan expects to raise EUR 190 mln in equity - mainly from Losan's existing partners in Spain - and a further EUR 300 mln internationally, Cristina Fernández Hoyo, chief strategy & investment officer at Losan, told PropertyEU. The fund, she said, will target four-and-five star assets in prime city centre locations and in gateway cities. The hotels will have an 'intrinsic value, special architectural features or will be emblematic buildings', Hoyo said.

Just over 40% of the fund will be invested in Europe, with the rest invested in the US, Canada and Asia.

Commenting on the global financial crisis, Hoyo said the challenging market conditions should prove to be an opportunity for the new fund. 'We launched the first fund at a time when the stock market was performing very well. Now investors may be even more receptive to a fund that can provide an alternative to the volatility of the stock market'.

She said Losan was a dedicated business that seeks to be considered 'the' worldwide reference management company for hotels. 'We are very familiar with the hotel business and know our way around a profit & loss account. We understand what you need to make an acquisition work,' she said.

The general target yield for the new fund will be around 7%, Hoyo said, in stark contrast to hotel deals by other investors in recent years that reflected initial returns of no more than 1%. The hotels acquired by the new fund will be assigned through management agreements to leading hotel brands.