Invesco launches first open-ended hotel fund

Invesco Real Estate has launched an open-ended hotel fund with an initial commitment of £157.3m (€179.5m) from 10 institutional investors.

The fund will invest in European assets, excluding the UK, with a target of 6-7% gross income returns. It will be Invesco’s third hotel fund but the first to be open-ended. 

Invesco said it will be focusing on city centre mid-market hotels with seven day operations, catering to business travellers in the week and tourists at the weekends.

The fund is launching with a £175m (€200m) seed portfolio of four assets in the Netherlands and Germany and is expected to grow to £438m (€500m) in the first two years.

Marc Socker, managing director of hotel fund management at Invesco, said: “We continue to see growing interest in this sector, particularly from investors who find the long leases and strong cash flows generated by hotels very attractive.

“Investors also noticed the way hotels continued to provide a positive total return compared to commercial property during the financial crisis, and this gives them an additional degree of confidence today. 

“The fund will target an income return which provides a premium to the long-run average income return from pan-European commercial real estate.”

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