Hong Kong-based real estate manager Admiral Investment is seeking to tap Australian institutional investors in its long-term goal to raise $200 million for a new fund that will expand the Travelodge hotel brand in Australia and throughout Asia.
The Travelodge Admiral Asia Hotel Fund will invest the capital into adapting existing buildings into the limited-service Travelodge hotel brand under an agreement with Singapore-listed hotel investor and manager ICP, which owns Travelodge Asia. ICP, for its part, will provide a 20 percent equity investment into the new fund that will have purchasing power of more than $260 million and is expected to spend between $10 million and $30 million per hotel.
While Travelodge is ubiquitous in the U.S. and Europe, with nearly 1,000 hotels across the two regions, the brand is only represented by 30 properties in Australia and New Zealand. Of these, 18 are owned by Mirvac and the NRMA. Admiral Investment founder and chief investment officer Victor Yeung said that the company is hoping to grow that number to 200 Travelodge properties in Asia alone over the next four years. The target markets for new hotels will be in Malaysia, Singapore, Japan, Australia and New Zealand.
Currently, Yeung said, 10 hotels are planned for the immediate future. Three of these are slated for Australia, and the fund is looking to invest $121 million into the development with an anticipated yield of between 6.8 and 7.9 percent.
"The limited service hotel model is a better way to invest in new hotels. The development cost per room is half of a full service hotel and the gross operating margins are 50.3 percent versus 31.8 percent," Yeung said, adding that Admiral was "on the cusp" of securing institutional funding from a major U.S.-based investor. The fund will target an internal rate of return of 15 percent after fees and taxes. The minimum investment amount is $10 million.
Source: Australian Financial Review