Melbourne’s Deague family has sold the city's Olsen and Cullen hotels, which are managed under its wholly owned subsidiary Art Series Hotels, in a deal with British investment giant M&G Real Estate for $146 million.
Asian Pacific Group, the family’s property and hotel investment arm, sold the assets, located in Prahran and South Yarra, as it considers taking the hotel brand offshore. Pepper Property Advisory’s Christian McKelvey and Alex Edwards handled the off-market deal on behalf of Asian Pacific Group.
Still, Group CEO Will Deague insisted that the company was not selling the Art Series brand, and told The Australian that the company is in talks about sites in the UK and Los Angeles. “The sale comes at an opportune time in the Australian hotel market with record low yields," he told the paper. "We have committed to a very long lease back on all properties, which we will continue to develop and operate as normal.” Large-scale international investors are showing more interest in core hotel assets, the paper noted. Australian hotel numbers are rising, with Melbourne's overall RevPAR up almost 5 percent this year, according to CBRE, which predicted that prices for the area's hotels would continue appreciating.
CBRE also noted that investor preferences for the hotel sector have increased from 1 percent in 2014 to 12 percent in 2015, but that investment appetite is shifting towards prime core assets.
The deal is M&G's first investment in the Australian hotels sector.