Apollo Global Management has launched a search for up to €390m (£286m) of debt to refinance a pan-European hotel portfolio it bought just over a year ago.
The private equity fund manager is looking to raise debt against 15 Holiday Inn and Crowne Plazas that together are valued at €520m and generate an annual income of €34.3m.
It has appointed Eastdil Secured, the real estate investment banking subsidiary of Wells Fargo, to run the process, codenamed Project Hound.
It is seeking €300m of senior debt, which would reflect a loan-to-value of 57.7%. It is also offering lenders two junior financing options of either €65m or €90m that would sit at loan-to-values of 70.2% and 75% respectively. The junior debt is expected to be priced at around a 7% internal rate of return. Apollo is seeking a five-year term.
As the European financing market has become more competitive since the start of the year, lenders have become more willing to back investors to buy and refinance portfolios extending across multiple jurisdictions.
With the portfolio heavily weighted towards Germany, Apollo is likely to be able to attract interest from German banks that can access cheap capital through the pfandbrief market.
The portfolio was purchased for close to €425m from Ivanhoé Cambridge in May last year and at the time included another three hotels.
At the point of sale, 11 of the hotels were in Germany, with two in the Netherlands, two in Spain and one each in Belgium, France and Austria.
It is owned by Apollo’s €2.5bn Apollo European Principal Finance Fund II.
