LONDON-Invesco Real Estate’s local office has launched a second pan-European hotel fund with an exclusivity agreement to purchase a $233 million seed portfolio.

Invesco hotel fund II targets mid-market, modern hotels in strategic locations near city centres, airports and convention centres in the euro zone, focused on long leases and operated by established national or international hotel operators with recognised brands. The fund is expected to build on the successful track record of hotel fund I which closed in November 2006 with $485 million of equity and today holds a pan-European, multi-brand portfolio of 16 mid-market hotels across nine countries with a gross asset value in excess of $900 million.

“Hotels are part of a strategic growth sector, providing a stable income product underpinned by strong covenants and rental guarantees," said Simon Redman, Invesco head of product management. "The branded hotel market is a growth sector and such hotels are more fundable, saleable and offer stable high income potential. With low brand penetration in Europe, this provides opportunities for consolidation within the sector and opportunities for institutional investors wanting to invest into this alternative real estate.” Invesco RE has $27.7 billion of assets under management globally, and in Europe owns $5.1 billion.