• More funds for hotels

The availability of equity for hotels continues to grow with the launch this month of a Eu1bn fund by Realstar.

The discretionary opportunity fund has equity of Eu300m and will seek total assets of up to Eu1.2bn across the UK and Europe, targeting hospitality, leisure and residential.

"Having remained patient over the past three years in what we felt was a relatively over-heated market, we now anticipate the next three years will offer more attractive risk-adjusted returns," said Ryan Prince, Realstar CEO, in a statement.

"Our investment strategy is focused on back-to-basics – refurbishment, reposition, extensions of unloved or under-capitalised assets are key tenets of our approach," he added.

An opportunity that may arise is recapitalising some companies "given the fragile state of certain balance sheets".

Realstar currently has over Eu4bn of assets under management. It expects to close on its new fund by the end of the year.

 

HA Perspective: There is a growing number of funds expecting to do a bit of bottom fishing in the hotel sector, even before it is clear we are anywhere near the bottom.

This week, REIT Asset Management, with advice from HVS Hodges Ward Elliott, unloaded three hotels to Moorfield's second property fund. Moorfield has handed management of the three units, formerly run by Swallow, to Shearings. No prices were disclosed.

In the wider commercial property market, values are slumping markedly. CBRE, the biggest property advisory company, said this month that values in the UK were now 18.5% lower than they were at the peak last summer. During June, the slump even picked-up speed, falling by 1.3% in that month alone.

The trend with hotels is more opaque, but anecdotally, thus far the drops seem less marked. There are undoubtedly signs of stress, however, particularly among private equity type investors.

This week, Dawnay Shore Hotels issued a statement that the turmoil surrounding its 8% shareholder Dawnay, Day would not affect its portfolio of 20 hotels in the UK currently leased to Barcelo on 45-year contracts.

Dawnay, Day called in the administrators over the weekend to advise it on strategic options. It has been selling-off stakes it held in property, finance and investment businesses and the holding in DSH is thought likely to go.

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