Abu Dhabi owners to sell Sydney Olympic Park hotels

The Ibis and Novotel hotels at Olympic Park in Sydney.

The Abu Dhabi Investment Authority, the world’s third-largest sovereign investment fund, is putting its flagship hotels at Sydney Olympic Park on the market in what could be the year’s largest single hotel transaction.

In a sign the group is seeking to capitalise on the top of the cycle, ADIA is selling off a series of smaller hotels around the country and is likely to be left holding just a clutch of hotels in Sydney’s Darling Harbour to fit its model of owning premium hotels in major global capitals.

At least $600 million is now expected from the sale of the 600-plus room offering which includes the 177-room Novotel Olympic Park, 212-room Pullman at Sydney Olympic Park, and the 144-room Ibis Sydney Olympic Park. The 156-room Ibis Budget Sydney Olympic Park, previously operated as a Formula One hotel, is also expected to be included in the sale.

Commercial Insights: Subscribe to receive the latest news and updates

ADIA declined to comment.

It swooped on what was then the Tourism Asset Holdings portfolio five years ago, paying about $745m, and has since restructured its holdings and sold off key properties, including the Mercure Melbourne Treasury Gardens Hotel.

The group has benefited from a rise in business travel and in 2016 sold a $200m portfolio of 15 Ibis hotels to French hotel giant Accor. That 1595-room east coast hotel portfolio was bought by Accor’s property investment arm, HotelInvest.

The entire Olympic Park hotel portfolio, which was initially developed in the late 1990s for the Sydney 2000 Olympic Games, is operated by the French hotel giant Accor under what is understood to be 50-year management agreements.

The sale of the Olympic Park sites comes as the NSW government is planning to push ahead of the Sydney Olympic site, including the redevelopment of the ANZ stadium.

Industry sources suggested that the Novotel Canberra may also be part of the ADIA deal but this could not be confirmed.

ADIA’s market offering comes as Sydney hotels experience strong trading performance driven by record international tourist arrivals.

However, sales volumes have been well down. There were 45 hotel sales in 2017, worth $1.635 billion, down from 71 hotel sales in 2016 worth $2.511 billion, and 73 transactions in 2015 worth $3.476 billion, according to a Savills Hotel Market 2018 report.

Agents Jones Lang LaSalle and Savills are understood to have been appointed by ADIA to sell the hotels, which form part of the 640ha Sydney Olympic Park at Homebush in Sydney’s west.

JLL chief executive Hotels & Hospitality Group, Craig Collins, did not return The Australian’s calls. Savills Australia managing director Michael Simpson declined to comment.

ADIA has never published the value of its assets but estimates put it at $US875 billion ($1.2 trillion). It picked up the portfolio of Olympic hotels in 2013, in what was then the nation’s largest hotel transaction. At that stage the portfolio of 31 hotels made ADIA the country’s largest hotel owner.

– with Ben Wilmot

This article originally appeared on www.theaustralian.com.au/property.