Internos Global Investors has reached the first close of its second value-add hotel real estate fund, raising €133m (£116m) of equity.
Hotel Fund II will have a 50% target LTV, giving it a total firepower of more than €260m to invest in three- to four-star city centre business hotels.
The company said it expects to deploy the initial capital over the next 12 to 18 months and raise up to €500m in committed equity by late 2019.
Its previous fund, which manages 14 hotels, achieved an IRR of 14% by 2016 and has paid out more than 8% cash dividends every year since 2012.
Jochen Schaefer-Suren, head of Internos’s hotel and leisure division, said: “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 year.
“In such markets, the new strategy focuses on creating value at the individual asset and market level, which can be achieved in any general market context.”
Last month, Internos launched its Core European Balanced Open-Ended Fund with €135m of equity.
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