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The fund characteristics
Name
European Hotel Capital B.V.
Fund structure
Closed end private equity participation company (Participatiemaatschappij).
Fund nature
Mature buy-out / buy and build fund, with a substantial real estate
asset component.
Investment period
8 years, including an investment period of 2 to 3 years.
Fund size
Euro 50 - 75 million in equity
Portfolio size
- 10 - 15 single asset hotels, including the real estate;
- Average investment volume Euro 15 million;
- Total transaction volume Euro 150 - 225 million.
Management
The fund management has a management agreement with the fund. Statutory
directors and shareholders of the fund management are MD Hotel
Investments, First Dutch Capital and Kragt Capital Investments.
The fund management has a strategic partnership with the industry
expert HVS International.
Leverage
Individual investments in the hotels and their real estate will
be leveraged with specialised international financial institutions.
Because of the mortgage conditions of this financing, the average
cost of capital will be significantly reduced, resulting in an
increased return for the equity investors of the fund.
Return
The fund targets an internal rate of return of 15% on equity.
Costs
Annual management costs will be 2% of the total capital committed
to the fund and a non-recurrent placement fee of 1% of the total
capital committed to the fund is applicable at the closing of
the fund.
Carried interest
Through a shareholding in the fund, the initiators of the fund
are entitled to a so-called carried interest. Through the carried
interest, the initiators will receive 20% in the excess return
of the fund, after distribution of invested capital and a cumulative
8% preferred dividend. The initiators and managers of the fund
have committed themselves to an investment of over Euro 10 million
in the fund.
Investors
The fund is a suitable investment for private and institutional
investors with experience in private equity or real estate investments.
The fund will form a distinct private equity element in their
diversified portfolio of assets.
Subscription
Minimum subscription is Euro 250,000 (two hundred and fifty thousand).
Shares and issue price
The fund offers a package of cumulative preferred shares and common
shares. The nominal share price of the cumulative preferred shares
is Euro 50,000 (fifty thousand). The nominal value of the common
shares is Euro 1 (one). The minimum package value is Euro 250,000
(two hundred and fifty thousand) of which a minimum of Euro 75,000
(seventy five thousand) will be paid up at the closing of the
fund and delivery of the share package.
Start date of the subscription
April 10, 2003
1st closing
Once investors have subscribed to a total of Euro 30 million in
equity, the fund management can arrange a first closing of the
fund.
Final closing
Once investors have subscribed to a total of Euro 50 million in
equity, the fund management can arrange a final closing. The
final closing will not exceed Euro 75 million.
Cash calls
The investors pay up on the shares in three instalments (cash calls),
each
amounting to 1/3rd of the capital committed to the fund by an investor.
The first instalment shall be paid at the first, respectively the
final closing. The second and third instalment shall be paid up
after respectively 12 and 24 months after the final closing. If
required, the fund management can make a cash call at an earlier
date.
Cash distributions
Cash distributions from investments to the fund and cash proceeds
from divestments will not be reinvested and will, if the cash
position of the fund allows this, be distributed to the investors.
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