Bell City Hotel sale awaits FIRB review

The Bell City Hotel in Melbourne’s north.
The Bell City Hotel in Melbourne’s north.

The Foreign Investment Review Board is the only entity standing in the way of the $157 million sale of Melbourne’s sprawling landmark the Bell City Hotel to offshore interests. 

Hong Kong’s Gaw Capital, which also owns a hotel in Manhattan, has picked up the hotel, office, student accommodation and development site in suburban Preston from its vendor Elanor Investors Group in a deal initially flagged by The Australian in May.

The hotel complex hit the market late last year via JLL ­Hotels, but is now likely to be snared by Gaw Capital, which has long boasted close ties to Elanor.

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The $1.1 billion real estate fund manager Elanor bought the 844-room property for just over $142 million about three years ago.

The four-star hotel and three-star student accommodation is presently managed by Mantra and Breakfree, which was recently bought out by French giant Accor in a $1.2 billion deal — Australia’s largest.

Part of the hotel site can be redeveloped with a permit for a complex of 377 apartments, 520 car parks and commercial space.

Bell City Preston

Preston’s Bell City complex.

Gaw Capital has a solid record of investment in Australia, and in 2016 teamed up with Abacus Property Group for a $200 million opportunistic investment fund targeting industrial assets on the nation’s east coast. It specialises in buying underused real estate assets, redesigning and repositioning them, as does Elanor.

Gaw Capital says it has raised $US9.6 billion ($12.7 billion) in equity since 2005, with $US14 billion under management. It is no stranger to hotel assets, having bought the Standard Hotel in Manhattan for $US323 million, with the acquisition price $US77 million lower than the 2014 reported selling price of the hotel.

The deal on the Bell Street, Preston hotel has been in the wings since at least May, when a fund specifically set up to hold the hotel asset reached the end of its three-year life — hence Elanor’s decision to sell the hotel.

The transaction is expected to settle late this month.

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