Luxembourg fund partners launches pioneering hotel fund
By Bridging Loan Directory
Luxembourg Fund Partners has launched a new GBP100 million hotel development and ground rent fund. The new fund will begin with the development of four sustainable hotels in London having already acquired the sites. These properties are contracted to IHG and Radisson on 20 year leases.
The Landmark Hotel and Ground Rent Fund’s (LHGRF) objective is to maximise returns and to achieve long-term capital growth for its investors by investing into a diversified portfolio of Hotel developments, hotel freeholds and ground rents, with an initial short to mid-term focus on the London region.
The LHGRF’ will introduce a mitigated risk investment approach integrating three main strategies: 1. development of prime sustainable hotel sites, 2. acquisitions of ‘opportunistic’ operational assets, 3. conversion of suitable properties to hotels. ‘LHGRF’ has implemented a number of pioneering enhancement features improving investor security as well as creating recurrent income and profits from ground rents. An important element is the focus on branded, standardised chain hotels.
“With uncertainty in traditional financial markets, the Landmark hotel & ground rent fund offers investors the opportunity to benefit from the continued growth seen within the hotel real estate sector. In challenging times asset backed strategies with contracted income from ground rents offer an attractive alternative for anxious investors,” says Luc Leleux, Founder and Board Director, Luxembourg Fund Partners.
The prime hotel and ground rent sector generates historically high yields and low volatility. It is projected to outperform substantially the conventional real estate asset classes over the next ten years. Budget hotels remain attractive to investors, maturing as a distinctive property investment asset. Capital values in London are already on the rebound, London hotels saw a 2.2% growth in values during 2010 and so far 2011 has shown consistent performance with analyst expecting steady increases in prime hotel asset values.
The ‘LHGRF’ is an open ended SICAV SIF regulated by the laws of Luxembourg. Its target fund raising is EUR100m which is to be invested across four branded landmark hotel projects. This opportunity has brought together a first class team combining experts in fund management, capital raising, private equity, ‘green’ hotel construction, hotel investments, acquisition and operations. Over the last five years the team has been responsible for the acquisition, development and management of real estate totalling more than GBP4bn.
The fund is open to Direct Investment, Self Invested Pension Plans and institutions. ‘Well informed’ investor rules apply. The Fund believes it will be of particular interest to those looking for superior returns combining transparent strategies with contracted income.
The ‘LHGRF’ objective is to offer an annual income of +9% to its investors, together with an increased security by stable and recurring earnings. The fund will be looking at investments to be made on the basis of a 5 – 7 year period, with an exit by way of trade sale or flotation. The aim is to deliver a targeted total return of 15-18% IRR. The ‘LHGRF’ is focusing its investment objective towards superior long-term risk-adjusted returns, receiving income via a wide range of experienced branded operators as tenants, freeholds and ground rents from individual units.
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