With Asian investment in Australian hotels on the rise—and likely to keep growing—it should come as no surprise that yet another prime hotel has gone to a Chinese private capital group. Sydney's Park Regis Hotel has reportedly changed hands for A$46 million ($34.70 million).
The unnamed new owner reportedly purchased the property through its operating company, Melbourne-based financial planning company Cornerstone Capital, from Sydney-based private hotel Staywell Hospitality Group. The Park Regis hotel is Cornerstone Capital's second acquisition in the last few weeks.
The owner has been in business in Australia for about eight years, and is also backing the Salter Brothers' investment in the $500 million IHG Hotel portfolio acquired from Eureka Funds Management late year. That portfolio includes the Intercontinental Hotel in Melbourne, Crowne Plaza Melbourne, Crowne Plaza Coogee, Crowne Plaza Canberra and Holiday Inn Potts Point, and is now owned by the Salter Brothers and property investor Lorenz Grollo's joint SB&G Hotel Group.
The 122-room hotel was sold with a 15-year management agreement to Cornerstone Capital. The hotel’s replacement value was attractive given the low hotel stock in the Sydney central business district area.
China in Australia
"Clearly, the Chinese are taking a wide-ranging and long-term view when it comes to the Australian tourism market and this has been reflected in a series of astute and strategic purchases of Australian assets and business," Peter Harper, SVP of investment sales in JLL's Hotels & Hospitality Group, said last month. "Australia's reputation for economic stability, the record breaking performance of the hotel sector in cities such as Sydney and Melbourne, and ever-increasing air links have fueled the interest in Australian hotel assets by Chinese investors."
All things considered, however, the sale of the Park Regis is small change compared to other recent deals. Other major Asian acquisitions in Australia include the $445-million sale of the landmark Westin Hotel to Singapore's Far East Organization and Hong Kong's Sino Group, and the Sydney Hilton Hotel, which was sold to Singapore-based Bright Ruby for $442 million last year.
And last month, Chinese group Tianlong Ribbon Property Unit Trust was identified as the buyer behind the $700-million hotel development proposed for Sydney’s Darling Harbour, to be called The Ribbon. The deal, which could be Australia’s largest hotel transaction, was made between private developer Grocon, take-out party Tianlong Ribbon, government landowner Sydney Harbour Foreshore Authority and U.S.-based Starwood Hotels & Resorts Worldwide.