New Zealand Super Fund invests in hospitality

The investment includes the Four Points by Sheraton and Adina Auckland Britomart, pictured, in Auckland. Photo credit: Adina Auckland Britomart

The $42 billion New Zealand Super Fund is investing into a $300 million hotel portfolio established by local construction and property organization the Russell Group and private investment company Lockwood Property Group, creating a platform for further investment in New Zealand’s tourism sector.

The phased investment, which is subject to normal closing conditions, includes the Four Points by Sheraton and Adina Auckland Britomart in Auckland as well as the BreakFree Hotel in Christchurch. The fund also plans to acquire and develop additional sites.

Will Goodwin, head of direct investments for the fund, said in a statement the fund had been considering opportunities to invest in New Zealand’s tourism sector. “This partnership will give the NZ Super Fund exposure to New Zealand’s fast-growing tourism sector, diversify our investment portfolio and help support the industry’s strategic objectives,” he said. “New Zealand needs additional hotel accommodation to support both growing domestic tourism and international arrivals. There are clear capacity constraints in this sector and we look forward to working with our partners to identify opportunities for future growth.” 

Despite recent visitor growth, New Zealand is poised to have a significant shortfall in hotel rooms, with more than 4,500 extra beds needed by 2025. Auckland faces the biggest constraint with a requirement of up to 4,300 new hotel rooms, but only 2,500 are projected to be built, according to Colliers International.

Lockwood Property Group’s Steve Lockwood said the significant opportunity for future growth in the sector was a major motivation for the deal. “The partnership provides a unique set of skills which will enable us to capitalize on the opportunities which become available in this sector throughout metropolitan and provincial New Zealand.” 

Under the arrangement, two joint ventures have been created, one to own properties operating as hotels and the other to manage properties and identify future opportunities.