Marc Thiel, chief executive of real estate investor and manager Euro Ejendomme, says the firm’s new hotel fund, which is aiming to close with EUR500m in capital by next June, aims to capitalise upon the relative lack in Germany of the middle-range business hotels common in the UK and France.
GFW: What is the background to your company and funds?
MT: Euro Ejendomme is a real estate investor and manager of the Euro Ejendomme Hotelfonds I SICAV-FIS, a Luxembourg-domiciled closed-ended Sicav-SIF designed especially for institutional investors.
The product addresses investors seeking mid-term holdings as well as a diversification into the attractive hotel market in German-speaking countries. The target portfolio consists of between 15 and 35 hotel properties, with the investment amount per asset ranging from around EUR10m to EUR30m.
The target final close date for the fund is June 30, 2010 and the planned fund size is EUR500m. The fund has a seed portfolio consisting of the Arcotel Camino in Stuttgart and Arcotel Rubin and Motel One Airport in Hamburg.
GFW: Who are your service providers?
MT: Our audit firm is BDO Audit in Luxembourg and the fund’s administrator is M.M. Warburg Luxembourg. Our fundraiser is Lazard in Frankfurt and second opinion and market valuation is provided by Deloitte and Christies.
GFW: How and where do you market the fund? What is the profile of your targeted client base?
MT: We market the fund in Germany, the UK, the Netherlands and Scandinavia, targeting institutional investors with investments starting at EUR10m.
GFW: What is the investment premise of the fund? What types of property do you invest in, and where?
MT: We are planning to make sustainable hotel investments in Germany with the possibility of seizing additional opportunities in Austria and Switzerland. We are targeting hotel properties in the expanding two- to four-star sector with a gross investment of up to EUR30m per asset.
We aim to create a diversified portfolio comprising a mixture of established existing hotels as well as selected turnkey developments where demand and appropriate infrastructure already exist. We require a very solvent, highly experienced management team with a very good reputation, and properties on long-term lease contracts allowing for lease indexation with a minimum remaining lease term of 15 years.
GFW: How do you make investments for the fund?
MT: Access to off-market transactions and an existing deal pipeline will ensure a swift deployment of the committed capital in a period not exceeding three years. We have already identified locations and assets – this is no blind pool.
GFW: What is your approach to managing risk?
MT: We undertake risk-minimising diversification regarding single investments, regions and managers.
GFW: What opportunities are you currently looking at?
MT: We are examining various investments exceeding EUR140m in value with regard to the fund requirements.
GFW: What developments do you expect to see in the real estate sector in your target market over the year ahead, and in other political and economic areas that may impact it?
MT: We see growing demand for two- and three-star business hotels in central locations. Only a few hundred of these exist in Germany, in contrast to the UK or France, where 1,800 such hotels can be found. We hope this demand will enable us to pick up more interesting projects.
GFW: What differentiates you from other managers in your sector?
MT: We have years of hands-on experience with the portfolio of hotels we have already.
GFW: Do you have any plans for further product launches in the near future?
MT: We are planning a health care fund targeting Germany only, and the next niche we will cover is senior living and assisting living.