Stamford hotel empire on the block in $1bn portfolio play
Singaporean tycoon CK Ow is bringing his portfolio of Stamford hotels around Australia to market with hopes of reaping about $1bn, in the largest portfolio to hit the block in more than a decade.
The legendary investor, who owns and runs the hotels through the Singapore-listed Stamford Land Corporation, is hoping to find a buyer willing to keep his famed brand on the hotels.
Stamford is likely to engage real estate agencies JLL and CBRE to advise on the transaction, which could generate offers for the entire portfolio or see it carved up as some properties, including the well-known Sir Stamford on Sydney’s Circular Quay are primed for development.
The coronavirus crisis has shaken hotel markets, with city properties hard hit by international border closures and continuing restrictions in some states, although momentum is returning with a domestic tourism boom getting under way.
Although the move is exploratory and the final form of the portfolio is yet to be decided, it could be pitched to international institutions looking to play the recovery of tourism and leisure, with Australia seen as an early mover on this front and private equity house Blackstone already lobbing a takeover bid for James Packer’s Crown Resorts.
The company’s seven hotels include Sydney’s Sir Stamford Circular Quay and Stamford Plaza Sydney Airport and Adelaide’s Stamford Grand and Stamford Plaza.
There is also Stamford Plaza hotels Melbourne and Brisbane, although the latter property may not be included in the offer, and a property in New Zealand, the Stamford Plaza Auckland.
The 1800 five-star rooms are a key attraction for hotel buyers, but Stamford has also worked up plans for a $400m rebuild of the Sir Stamford Hotel at Circular Quay into luxury apartments.
Big buyers are making their presence felt in local markets. Singaporean sovereign fund GIC, advised by Salter Brothers, is sealing a deal to buy a portfolio of 11 hotels run by TraveLodge in a deal worth more than $600m.
The hotel industry is in recovery mode but the price on that portfolio, which comprises more than 2000 mid-range rooms, was ahead of expectations and not significantly dented by the coronavirus pandemic.
Stamford said it was “exploring the possibility of the divestment of part of its portfolio of properties under its hospitality business segment and moving to an asset-light strategy with respect to hospitality assets”.
The company insisted its brand would stay, adding it would “continue to maintain its hotel management business”. But some buyers may look to get the most out of the portfolio by putting new brands on the hotels, which bring the operational part of the business into play.
Stamford indicated it was serious about selling and then pouring the proceeds into new areas. The company said it “will be reinvesting its sale proceeds into core businesses in investment properties, and will continue to expand its development business”.
The company has developed apartments in Australia, including in Sydney’s Macquarie Park. It also developed residential properties in the city’s up-market Double Bay and in the CBD.
Stamford said it would continue to explore expanding in hospitality, investment and development outside of Australia, New Zealand and Britain into other mature or developed markets. Stamford told shareholders that through its “exploration exercise”, it was likely to receive and review many divestment opportunities “which are in line with its corporate growth strategy”. “Some of these may be in the nature of acquisitions, divestments and joint ventures,” it said.
Mr Ow has long toyed options for his Australian hotel portfolio. In 2011, Singaporean property giant Ascendas agreed to buy three hotels — in Melbourne, Adelaide and Sydney — from Stamford in a $316m deal, but this did not go ahead.
At the time Stamford, Australasia’s largest independent owner-operator of luxury hotels, and an active developer, struck a memorandum of understanding to sell and lease back three hotels: the Stamford Plaza Melbourne, Stamford Grand Adelaide and Stamford Plaza Sydney Airport.
The once high-flying Valad Property Group also made an unsolicited offer of $850m for Stamford’s portfolio of hotels in 2008.
Mr Ow has also been selling local residential property. In 2018, hotel owner Jerry Schwartz and wife Debbie bought the Phoenix Acres estate in Sydney from the Singaporean for close to $67m.
This article was first published on www.theaustralian.com.au.