Internos holds €133m first close on hotel fund II

The London-based fund manager expects the European value-add hospitality fund to have an AUM of €500m by 2020.

Internos Global Investors has held a €133 million first close on its second hotel fund.

The London-based fund manager garnered the capital from seven German institutional investors. All but one had invested in Internos’ first hotel real estate fund.

The firm will pursue a value-add strategy for Hotel Fund II with a focus on 3-4 star city-center business hotels across Europe.

With a targeted LTV of 50 percent, Internos has just over €260 million to deploy from this initial closing which it expects to do over the next 12-18 months. The firm also anticipates receiving further equity commitments pushing Hotel Fund II’s assets under management to €500 million by late 2019-20.

“Hotel Fund II provides investors with access to value-add opportunities at a point in the cycle where many hotels with long-term fixed income are fully valued in many markets, yet may face rising interest rates and resulting potential value impact over the coming years,” said Jochen Schaefer-Suren, the head of Internos’ hotel and leisure division.

Internos embarked on a core strategy for its first hotel fund, launched in July 2012, which currently has €500 million of AUM. The firm manages 14 hotels in the vehicle, which has paid out over 8 percent cash dividends every year since 2012 and achieved an IRR of 14 percent by 2016.

Internos also manages four hotels representing €150 million of AUM in a separate account hotel value-add mandate.

“With the addition of Hotel Fund II to our existing hotel funds and mandates, we offer investors attractive returns across the risk spectrum, from core/core-plus through to value add and even opportunistic hotel investments,” said Schaefer-Suren.

Established in 2008 by real estate industry veterans Thornton and Jos Short, Internos has offices in London, Frankfurt, Amsterdam, Paris, Lisbon, Milan, Luxembourg and Madrid, and employs around 100 staff. The firm currently manages more than 600 properties across eight countries valued at around €3.5 billion.