Internos plans opportunistic twist for hotel fund’s sequel

First fund raises €75m from four investors and buys €100m seed portfolio

Internos Real Investors plans to launch a second hotel fund, with an opportunistic investment strategy, for higher-risk investors.

The fund will follow Internos’s first hotel fund, a low-risk, income-oriented fund that has just had a first closing and exchanged contracts on a €100m seed portfolio.

Jochen Schaefer-Suren, partner and head of Internos’s hotels and leisure team, said: “We are also working on a hotel opportunity fund which will essentially be a club for high- net-worth investors.

“Over the next 24 months I am convinced that there will be interesting deals to do by picking up distressed assets in countries such as Spain, Portugal, Ireland and so on. I have identified a number of investors and we are talking to a couple.

“My strategy is building up a business that revolves around the entire risk spectrum in leisure and hotels.”

Schaefer-Suren started work on Internos’s first, low-risk fund a year ago, shortly after joining  the firm from Invesco.

The Internos Hotel Real Estate Fund has raised €75m of initial equity from four German institutions and is structured as a spezialfond, operated by Internos’s new KAG.

He said another two German institutions are likely to invest and the team hopes to buy assets worth €300m, using moderate, 40% leverage.

The seed portfolio comprises four, three-to-four-star hotels let on leases with stable trading records, including the Lindner Hotel in Frankfurt, the Park  Inn in Nuremberg, which  was acquired from German developer GBI, and hotels in Amsterdam and Cologne.

The seed portfolio was bought  with €40m of senior debt from Bayern LB, a bank Schaefer-Suren has worked with before.

He said the fund had been “tailor-made” for its investors and would be kept smaller than pre-financial crisis funds to ensure investors were comfortable with one another and that there was a clear and credible exit strategy for investments.

The hotels team is also working on raising senior debt to refinance a chain of four-star aparthotels; it advises Generali, a former client of Schaefer-Suren, on its hotel assets; and is asset manager for Quintain’s Hilton at Wembley.