The nation’s hotel market is slowly coming back to life, with China’s Greenland Group preparing to list the landmark five-star Sydney CBD Primus Hotel at an asking price of about $170m, while the Accor Invest Australia portfolio, worth around $200m, is back on the market after the collapse of a sale to fallen investor Michael Gu.
The Primus Hotel marketing campaign will be a litmus test for Sydney CBD hotels, which are still being severely affected by the pandemic, prompting owners to weigh options including selling or taking on partners. The five-star end of the market could see the first activity, with Greenland Australia managing director Sherwood Luo saying the company, which developed the 172-room hotel as part of a larger project including an adjacent apartment complex that has sold out, is fielding offers.
“Given the numerous recent unsolicited approaches received from both hotel investors and operators Greenland Australia has decided to offer Primus Hotel,” Luo said.
JLL Hotel and Hospitality’s Mark Durran is advising on the transaction.
“The Primus Hotel is the first major five-star Sydney hotel to be offered in many years, and given the scarcity of such opportunities will be highly sought-after by an array of domestic and offshore investors,” Durran said.
But the coronavirus crisis has shaken up the market, and some major deals proposed before the pandemic struck have collapsed.
One example is the failure of last year’s largest hotel sale, the 17-strong Accor Invest Australia portfolio which Gu’s collapsed iProsperity Group had agreed to buy, with the deal being re-cut even as his empire was crumbling.
Gu has since fled the country, owing investors around $350m, and is reportedly residing in Los Angeles or Vancouver.
The centrepieces of the Accor Invest Australia hotel portfolio are the Ibis Melbourne hotel and apartments, and the Ibis Sydney Airport hotel, plus a range of regional assets in Coffs Harbour, Newcastle and Dubbo. The selling agents JLL Hotels’ Craig Collins and Peter Harper declined to comment on the portfolio, which spans three states.
But not all hotel deals are being rekindled. Singapore group SC Capital Partners last year won approval for a super-tall hotel and office tower on the site of Sydney’s Bligh House office building. But after a campaign to find a partner it will instead just refurbish the offices.
SC Capital and development manager Fortius Funds Management are hoping to complete the revamp in October and are pitching it as high-end, boutique office space in the financial district. The new project will be 15 individual floors of 500sq m, giving smaller tenants the opportunity to occupy a full floor. Rents are at a significant discount to surrounding skyscrapers.
SC Capital managing director Andrew Heithersay said “longer term” Bligh House remained an outstanding mixed-use hotel and office development and there were still plans permitting a 59-level tower with about 420 hotel rooms and 5800sq m of office space.
“Given the superb location, unique building attributes and strong rental value proposition, we are confident the leasing campaign will be very well received by prospective occupiers,” Heithersay said.
The Sofitel Wentworth next door was also taken off the market as bids did not hit the mark. Singapore’s acquisitive Royal Group had been in exclusive due diligence to buy the 436-room hotel for close to $300m.
But others are pushing on, with developer Built advancing a six-star hotel scheme to develop a site adjoining the city’s historic Chief Secretary’s Building.
The company is seeking to develop two Phillip Street buildings, one it owns and another owned by the NSW government, into a hotel, using the state’s unsolicited proposal process.
It would incorporate the heritage-listed assets into a new 47 storey top-class hotel, with about 300 beds.
– with Lisa Allen
This article originally appeared on www.theaustralian.com.au/property.
