German hotel group Deutsche Hospitality and Luxembourg bank Commerz have formulated a €250-million ($284.5 million) fund to develop up to eight hotels across Deustche’s four hotel brands, which include Steigenberger Hotels & Resorts, Intercity Hotel, Jaz in the City and Maxx by Steigenberger.
LUXEMBOURG, 18 December 2018 --
- Luxembourg open-ended special AIF for professional and semi-professional investors
- Total volume of 250 million euros planned, of which 40 percent equity capital
- Planned return 5.5 percent p.a. IRR
In cooperation with Deutsche Hospitality, the umbrella brand of Steigenberger Hotels AG, Commerz Real has issued a fund for European hotel real estate through its Luxembourg-based company CR Fund Management S.à r.l.. “Commerz Real European Hotel Fund”, which is structured as an open-ended special AIF (alternative investment fund) in the form of an SCA (société en commandite par actions / a partnership limited by shares) under Luxembourg law, is to develop a risk-diversified portfolio of as many as eight three- to five-star hotels from the Steigenberger Hotels and Resorts, Jaz in the City, MAXX by Steigenberger and Intercity Hotel brands in sought-after European locations. It is planned to have a fund volume of 250 million euros. Steigenberger Hotels AG is participating with approx. twelve million euros. A further 92 million euros are to be acquired from professional and semi-professional investors. This corresponds to an equity capital ratio of about 40 percent. The planned annual return is at least 5.5 percent (IRR).
Johannes Anschott, the board member of Commerz Real responsible for institutional business, said, "With this fund we are offering a small, exclusive group of investors with a core-plus or value-add strategy the possibility to profit from the expertise of the Steigenberger Group and that of our proven hotel team."
Thus as a co-investor Steigenberger is a member of the investment committee, and in cooperation with the hotel experts from Commerz Real will analyse every investment with regard to location, concept and profit potential. The acquisitions will be properties under construction or hotels with a residual lease term of about 18 months. In the framework of the cooperation Steigenberger will conclude long-term lease agreements for these hotels following the acquisition. The fund will then sell them again after a holding period of at least five years. “Thus we will be making specific use of the potential for value appreciation and ensuring the portfolio remains young and healthy,” says Anschott.
Matthias Heck, Chief Financial Officer of Deutsche Hospitality, said, "We have a business relationship with Commerz Real going back many years which is characterised by mutual trust. With the hotel fund we can jointly make new, long-term investments as equals and continue to develop Deutsche Hospitality with its Steigenberger, Intercity Hotel, MAXX by Steigenberger and Jaz in the City brands for our guests."
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