Internos Global Investors has completed the purchase of the Steigenberger InterCity Hotel Leipzig from B&L Gruppe.
The pan-European owner-managed real estate fund manager with €4.1bn AUM bought the German asset on behalf of the Internos Hotel Real Estate Fund I.
It is the 10th hotel to be acquired for the vehicle since its first closing 18 months ago.
Together with the recently announced acquisition of the Maritim Dresden, which will close shortly, the latest acquisitions represent circa €70m of investments for the fund since the beginning of 2014.
The InterCity Leipzig opened in May 2013 and is operated under a long lease by InterCity Hotels, a 100% subsidiary of Steigenberger Hotels.
The property is a brand new four-star hotel with 166 rooms, a restaurant, bar and meeting facilities. It is in a prime location in the heart of Leipzig, next to the main train station and opposite the new Höfe am Brühl shopping centre.
The headquarters of the Saxony Landesbank is being developed next to the hotel. The triple-A location and the quality of the building and innovative, income-oriented hotel concept make the property a good fit with the hotel fund’s investment strategy. It also brings further diversification to the portfolio by adding a new hotel brand, tenant and city.
Following the latest acquisitions and commitments, assets under management for the Internos Hotel Real Estate Fund I will reach circa €310m.
Based on recently raised and expected additional equity, total AUM is forecast to exceed €400m. The fund is poised to continue generating annual income returns in excess of 7.5% dividend pa for the next few years based on strong cash flow, long leases with mostly fixed indexed rent and low interest rate financing fixed for five years.
Internos partner Jochen Schäfer-Suren said: “Despite tripling the equity raised since the first closing in July 2012, we have now deployed circa 90% of the total equity in line with the investment strategy, while exceeding target income returns of 7.5% pa. In addition, we have two or three more acquisitions in progress and thus expect to deploy the remaining equity by this summer.
“Later in 2014, we plan to launch a successor fund to our first hotel real estate fund focused on the same core, income-oriented investment strategy and three- and four-star existing leased hotels across Europe.
“In parallel we are currently pursuing various opportunities to invest the €200m capital from the Value Add Fund, which is focused on hotel real estate across Europe with capital growth opportunities via cyclical market recovery, renovations and repositioning such as changes to brands, leases or operators.”
bridget.o’connell@estatesgazette.com
