Hotel boom hits the capital as Serene picks up Abode Hotel
The boom in hotel sales has hit the nation’s capital, with boutique funds manager Serene Capital expanding its hospitality portfolio with the purchase of Canberra’s Abode Hotel and Apartments for $41.5m.
The move comes amid a lift in hotel sales, including pub mogul Arthur Laundy and business partner the Karedis family buying the Sheraton Grand Mirage resort on the Gold Coast for $192m and Singapore’s Worldwide Hotels Group buying the Novotel and ibis Melbourne Central Hotel for $170m.
The Canberra hotel was sold off by Melbourne-based Shakespeare Property Group and came with a long-term lease to Iconic Hotels under its Abode brand.
Iconic is a unit of Canberra residential builder-developer Geocon, which sold the hotel to Shakespeare in 2014 for $28.8m in a sale and leaseback deal.
The latest deal was brokered by CBRE’s Michael Simpson, Vasso Zographou and Tristan Cotchett.
Sydney-based Serene Capital has more than $750m in assets under management and advisory across the hotel and office sectors, and sees value in hotels after years out of the market.
Serene Capital chief executive Glen Boultwood said the firm had reopened the Serene Capital Hotel Fund 1 to new investors after raising $20m earlier in the year.
“We are now starting to see hotel yields and value back at levels when we started the fund back in 2014,” Mr Boultwood said.
Abode Woden is the 10th hotel bought by the specialist Serene Capital trust.
“The hotel’s defensive demand drivers surrounding government, health, education and infrastructure, combined with the lease income security and high yield, add to the defensive nature of the fund’s income stream,” Mr Boultwood said.
“Having not invested over the past five years due to the lack of perceived value, our discipline is continuing to pay dividends to new and existing investors in the fund.”
CBRE’s Mr Zographou said the hotel had generated strong interest from international and domestic investors, drawn by the long-term lease agreement and high yearly rental increases.
The property in Canberra’s south has 152 self-contained apartment-style rooms, three conference rooms and an all-day dining, in-house restaurant. It is on a Crown-land leased site at 10 Bowes St, about 10km south of the Canberra CBD.
“The Abode offered a lease return, which was attractive from a yield perspective. Underlying this is the strength of the Canberra hotel sector, corporate and federal government-related travel as well as significant domestic tourism,” Mr Zographou said.
Shakespeare Property Group vice-president, hospitality assets and investments, Richard Saab, said the hotel delivered a solid 15.7 per cent internal rate of return to investors. “With about $2bn of commercial and hotel properties, we considered it timely to sell the asset and redeploy the capital to other investment opportunities,” Mr Saab said.