Internos Global Investors has closed the acquisition of the Hilton Danube in Vienna, Austria, from Immofinanz AG, with a total investment of close to EUR52m on behalf of the Internos Hotel Real Estate Fund.
This acquisition represents the seventh hotel Internos has acquired for the fund in the last 12 months.
The property is an existing, high quality, 4* hotel with 367 rooms with a strong cash flow track record, well located in a strategic location in Vienna. It is operated under a long lease by the Hilton Group. The hotel’s profile and location in the capital of Austria - a core eurozone country and target investment region for the fund - fits perfectly with the fund’s investment strategy and adds to the portfolio’s diversification with the addition of a further city and the Hilton brand, a new brand in the fund’s portfolio.
The stable income of the now seven hotel strong portfolio, the enhanced diversification and the conservative debt of only 40 per cent LTV, contribute to the fund’s low risk profile while generating a very good level of income. The fund was able in its first year to pay dividends of over eight per cent p.a. (above its 7.5 per cent target) and is forecast to reach or exceed its IRR target of 11+ per cent p.a.
The fund is structured as a German Spezialfonds operated by Internos’ Kapital Anlage Gesellschaft (KAG). Based on additional equity raised from the seed investors and new investors since the first closing the total target asset under management volume size is forecast to reach or even exceed EUR375m. The fund is managed by Jochen Schäfer-Suren, partner of Internos and managing director of Internos’ hotel and leisure division, working together with Paul Muno, partner and managing director of the Internos KAG and the Internos team in Germany.
Schäfer-Suren says: “This latest acquisition, together with historically low interest rates, secured against very attractive returns and enhanced diversification, further reduce the portfolio’s risk profile and thus improve the quality of the returns. Due to the support of our investors, we have been able to nearly triple the initial equity to a total of EUR210m, which allows us to acquire up to a further EUR150m of hotel acquisitions in the next six to 12 months.”
Muno says: “The success of our first fund under the aegis of Internos Real Investors Kapitalanlagegesellschaft (KAG) has proven again that Spezialfonds are still the appropriate investment vehicle for institutional investors in the German market. Accordingly we plan to use our KAG platform to develop additional Spezialfonds products for various sectors and risk profiles and can also respond individually to customer needs and provide customised investment solutions.”