Teaming up with Veriu Hotels & Suites subsidiary Furnished Property, Folkestone has launched a Green Square hotel fund as part of its expansion strategy in Sydney. The groups have aimed to raise $23.2 million and combine it with $21.75 million in loans to fund the acquisition of the 18 O'Riordan Street, Alexandria site.
A 144-guestroom Veriu hotel, which is set for a July 2019 opening, will be developed on the site before it switches hands to the fund in a $43.5-million deal with the project's developer GS Hotel Development. It will be within the $13-billion Green Square Urban Regeneration Area near Green Square train station.
Folkestone has released details on this new hotel development fund after launching the Folkestone Syndney Airport Hotel Fund last month. The fund acquired the Mercure Sydney Airport Hotel in a $76.4-million deal before raking in $50 million after closing last week. The fund also gained $49.4 million in borrowings from an Australian bank and underwriting commitments of $31.9 million, $15 million of which will be paid by Folkestone. The Accor-operated hotel, which has 271 guestrooms, is near the Sydney Airport Domestic Terminal and the city's central business district. The Mercure will undergo an extensive renovation and repositioning in 2018, including the refurbishment of guestrooms, function/conference facilities, the bar, the restaurant and the hotel's façade and external features.
Folkestone's Greg Paramor foresees a positive outlook for Sydney's hotel market. "The Sydney hotel market is experiencing strong trading conditions. Inbound and domestic tourism is expected to continue to grow, buoyed by the opening of the International Convention Centre, a lower Australian dollar and Sydney continuing to rate as a major tourism destination," Paramor told Reuters.