Anglo Indian real estate fund Meghraj and British hotel chain Travelodge are together launching a £100 million ($164.5 million) fund called Tamesis Capital to invest in hotels in UK. The fund will focus on investing in distressed hotel assets, reports PropertyWeek.com.
The fund will buy hotels operating as going concerns from their existing owners, banks and administrators. It will then re-brand the hotels and let them to Travelodge on leases of 35 years at rents reflecting initial yields of 7%.
Tamesis Capital will look at buying hotels in cities like London, Manchester , Birmingham and Scotland. The fund, which will have a life size of 5 years, will target an internal rate of return (IRR) of 12-13%. It will also aim at an income return of 8%, out of which it will pay 6% annually to its investors and will pay an additional 2% at the end of the fund’s life of 5 years. It will have a wind down period of 2-3 years.
The fund will raise £20 million through private equity, £20 from institutional equity and the remaining £60 million through debt. While the fund has already raised the money from private equity, it is in discussions with 6 banks for raising the debt, says the report. Tamesis has also approached insurance companies and family owned professional funds in Switzerland and the UK for raising the institutional equity.
The firm will deploy the fund in 9 months and based on its success, it may even launch a second fund.
Meghraj is a financial services and a real estate group based in the British Isles. It provides its services to high net worth individuals, companies, financial institutions and banks. The company manages $12 billion in client assets. The company operates from London, Jersey, Geneva, Vaduz, Dubai, Mauritius, multiple locations in India, and Tokyo.
The group also has a distressed assets services firm in India, ARMEDAS Consultants Private Limited. The firm provides services for distressed financial and business assets. It provides services to both, lenders that have distressed assets that require solutions, and investors wishing to invest in such assets. Headquartered in Mumbai, ARMEDAS also operates from Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Kolkata and Pune.
Meghraj also has a real estate services firm in India with Jones Lang LaSalle, called Joned Lang LaSalle Meghraj. The firm was formed in June 2007 when Trammell Crow Meghraj (TCM), a Meghraj Group company, merged with Jones Lang LaSalle. Both the companies hold 50% stake each in the venture.