Hotel Transformation Fund 1

H2i establishes Hotel Transformation Fund - GSH is operational partner

• H2i launches a Hotel Transformation Fund with an investment volume of €500 million
• GSH is the exclusive operational partner
• Engel & Völkers Hotel Consulting accompanies and advises the fund

Hamburg/Munich, December 13, 2022 - H2i Asset Management is launching a closed-end hotel real estate fund that invests in operator-free hotels with repositioning potential in top inner-city locations in German A, B, and C locations. The H2i "Hospitality Transformation Fund 1" (HTF) will run for at least 7 years and is aimed at professional and institutional investors. The target volume is €500 million. The focus is on hotel properties with an investment volume of €10 to €15 million. These will be operated under a uniform brand and management. This raises value creation potential through repositioning, digitization, and ESG-compliant renovations. Thus, sustainable use of the property will be a central component of the strategy. Development opportunities are identified and implemented by both partners at the time of acquisition.

GSH becomes operational partner

Gorgeous Smiling Hotels GmbH (GSH) takes over as a strategic partner to manage all acquired hotels and act as the hotel operating company's manager. Engel & Völkers Hotel Consulting GmbH (EVHC) had conducted a structured operator search on behalf of H2i beforehand. EVHC also supports H2i in fund establishment and further property acquisition.

"The hotel sector is changing. The focus of our fund is on individual hotels facing similar structural challenges. These include maintenance, digitization, energy costs, or succession issues. As a family-owned company, we understand the needs of owners who have been hit by Corona and now face new challenges," says Tilman Hickl, Managing Partner at H2i. Engel & Völkers Hotel Consulting GmbH already has the first properties in the pipeline today. The first purchases for the "Hospitality Transformation Fund 1" are expected to take place in the second quarter of 2023.

Seizing market opportunities

Compared to comparable markets, Germany has a high proportion of individual hotels. Chain hotels are still significantly underrepresented. The owner-managed hotel businesses are mostly family-run, with the hotel operator typically also the building owner.

Heiko Grote, Managing Partner at GSH: "The challenges for individual hotels have intensified in recent years, especially in cities. Operators and owners are struggling significantly. As an owner-managed company, we understand how to leverage these synergies between operation and ownership." Marco El Manchi, Managing CFO of GSH adds: "Economic and ecological aspects should not contradict each other to meet the high importance of environmental and climate protection in the hotel industry and to sensitize future guests to the advancing climate change."

Andreas Ewald, Managing Partner of Engel & Völkers Hotel Consulting GmbH, adds: "We have brought together two experienced partners who complement each other perfectly: H2i stands for decades of experience in the investment industry, while GSH brings expertise as a multi-brand operator with numerous brands and a flair for good locations."

About H2I

H2i Assetmanagement GmbH was founded in 2019 by Hans Hammer and Dr. Tilman Hickl. As an investment and asset management company, it offers professional clients investment solutions for the entire life cycle of the property. Investment structures range from mezzanine constructions and joint ventures in the project development phase to forward sales or forward fundings. H2i assumes the performance-responsible party in the project development and construction phase, particularly project controlling and reporting, as well as asset management including the management of all service providers in the inventory phase. For more information, visit: https://www.h2i-management.de/?lang=en

About Gorgeous Smiling Hotels

Gorgeous Smiling Hotels (GSH) coordinates all operational issues of the hotels integrated into the group as a shared service center. This includes development, yield management, purchasing, sales, marketing, and all legal matters of the operating companies. GSH's franchise partners are international hotel chains such as InterContinental Hotels Group, Hilton, or Wyndham, whose brands are successfully adapted and placed for the European market. The portfolio of around 40 leasehold properties and more than 20 management properties ranges from mid-scale hotels to serviced apartments and upscale star-rated hotels.

About Engel & Völkers Hotel Consulting GmbH

Engel & Völkers Hotel Consulting GmbH (EVHC) was founded in early 2017 as an umbrella company in the Engel & Völkers network. With its consulting approach, it supports owners, investors, and operators throughout the life cycle of the hotel. The range of services includes consulting in the areas of development, strategy, and asset management as well as transaction consulting for buyers and sellers. EVHC benefits from the extensive wealth of experience of its employees and the international Engel & Völkers network with locations in 34 countries on five continents.