EXPO 2010: Invesco launches Euro hotel fund

The move by Dallas-based firm Invesco comes hot on the heels of hotel specialist Azure Properties which said it was in discussions with major private equity groups and commercial real estate funds on a joint venture to acquire up €1.1bn of hospitality assets

Invesco Real Estate, the Dallas-based firm, has launched a hotel fund in Europe seeded with €168 million of  assets.

The company which is owned by New York-listed asset manager Invesco, said at the EXPO REAL trade show in Munich yesterday that its Hotel Fund II had entered into exclusive talks to acquire a portfolio, though it did not give more details.

Its predecessor Hotel Fund I raised €350 million of equity in November 2006 and went on to buy 16 modern mid-market hotels in nine countries with a gross asset value of more than €650 million.
Simon Redman, head of product management, said hotels were a strategic growth sector, providing assets with stable income “underpinned by strong covenants and rental guarantees”.  

The announcement follows hot on the heels of hotel specialist, Azure Properties, whcih said it was in discussions with major private equity groups and commercial real estate funds to form a joint venture aimed at acquiring up to £1 billion (€1.1 billion; $1.5 billion) of hospitality assets in the UK and across Europe.

It said in a statement two weeks ago that the concept behind the Azure fund was to give institutions the size of hotel portfolio they needed but also to address a key weakness of their investment strategy in the hotel sector over the past decade.

“Hotels have emerged as a separate asset class within institutions’ real estate holdings over the past ten years, (but) the market itself has become more fragmented and less transparent, which has made investment decisions more difficult to assess,” Azure added.