• Funds start flexing muscles

Despite the credit turmoil, dedicated hotel funds are continuing to spring-up and flex their acquisition muscles.

The latest deal was struck by Algonquin, the investor and fund manager whose flagship fund, Capital France Hotel, is backed by GE Real Estate.

Helion, a new investment company managed by Algonquin, has bought two boutique hotels in Paris through agent CBRE Hotels. The properties, The Walt and Le Marquis, have a total of 61 rooms.

The main fund, Capital France Hotel, is intended to grow to £1bn by the end of 2010 through investing throughout the Euro zone plus Scandinavia and Central and Eastern Europe.

CFH has 12 hotels with 2,140 rooms and is valued at Eu275m. The bedrock is the portfolio of nine Rezidor branded properties in regional French cities acquired from Capital Hotels. In addition there are two Mercures in Paris and a Marriott in Cap d'Ail.

BNP Paribas Assurance has partnered with GE as a founding limited partner of CFH. And the fund will be opened for other third-party investors. GE is both an investor and operational partner.

Remy Gancel, managing director and head of new business for GE Real Estate Europe, said that CFH is an "almost unique" investment vehicle in that it combines strong hotel expertise with its shareholders financial strength. A key competitive advantage was the strong industry expertise focused on European markets.

Jean-Philippe Chomette, chairman and founder of Algonquin, said: "GE Real Estate's large presence in Europe will enable us to generate unique acquisition opportunities."

Separately, in April Strategic Capital Solutions announced it was targeting $300m in funding for a dedicated hospitality financing program.

"The current turmoil in the credit markets has created a unique situation where developers and owners of hotel and resort properties or projects have a desperate need for financing. Our program is geared towards providing immediate capital to experienced owners and developers in key growth markets," said Shiva Maharaj, a senior member of the SCS business development team, in a statement issued at the time.

The focus for SCS is the Americas and Europe. Leo Davis, vice president of SCS's newly formed London-based European division said the UK, Spain, Italy and France were of particular interest.

 

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