Invesco Real Estate (Invesco), has closed on the acquisition of a €530m pan-European hotel portfolio, in one of the industry’s largest pan-European deals of institutional investment into the hotel real estate sector in 2017.
The portfolio of 13 hotels has been acquired on behalf of three mandates: Invesco’s newlyestablished open-ended European Hotel Fund, which acquired 38% of the portfolio (four hotels); a long-standing UK separate account mandate, which acquired 26% of the portfolio (eight hotels); and a joint venture in the form of a new separate account mandate with a Danish and a Dutch institutional investor who have acquired the remaining 36% of the portfolio.
Marc Socker, Managing Director, Hotel Fund Management at Invesco Real Estate comments: “This transaction marks a double-barrelled success for Invesco – not only are we pleased to have secured this high quality portfolio of strong-performing hotels in two of Europe’s strongest economies, but more importantly, we are delighted to welcome new investors to our European business, many of whom are taking their first steps into the European hotel real estate sector.
“It is encouraging to see increased interest from institutional investors in hotels, who recognise the key attributes this sector can provide for institutional investment portfolios with their longer leases, lower volatility and long-term income and return characteristics compared to commercial real estate,” concludes Marc.
The €530m portfolio of full and limited service hotels is located across Germany and The Netherlands – two of the strongest economies in Europe. 85% of the portfolio is in locations across Germany [Berlin, Cologne, Dortmund, Düsseldorf, Frankfurt, Hamburg, Heidelberg and Munich] with the remaining 15% in Amsterdam. The portfolio is made up of mid-market hotels in city centres of major gateway cities as well as strong secondary cities, most of which operate as seven-day markets, catering to business travellers in the week and tourists on the weekends.
Invesco acquired the portfolio from certain funds managed by affiliates of Apollo Global Management, LLC (together with its consolidated subsidiaries, “Apollo”) (NYSE: APO). Invesco has entered into a joint venture agreement with EVENT Hotels, a well-known, strong and established operating partner with an alignment of interest, for the day-to-day operational management of the assets. All assets are franchised under IHG brands as Crowne Plaza, Holiday Inn and Holiday Inn Express.
Andy Rofe, Managing Director, Invesco Real Estate comments: “Our hotel footprint is growing thanks to our specialised team of hotel experts. In the last two years, we have concluded two close-ended hotel funds and transacted c.€2bn in the sector on behalf of the pooled funds and separate accounts. In 2017 we have already transacted or have in the pipeline c.€900m of transactions for the new fund and our growing portfolio of separate accounts.
In our view, hotels are now seen as mainstream real estate investments and we are delighted that the appetite from our growing client base into the sector supports this view.” Invesco Real Estate was advised by Paul Hastings and PWC. Apollo Global management, LLC were advised by Eastdil Secured.
