Last month, we reported that The Abu Dhabi Investment Authority, the Middle East’s largest sovereign wealth fund, was looking to "shake up" its $1 billion portfolio in Australia and had entered talks with France's AccorHotels to restructure its holdings.
Today, the two businesses have finalized an agreement to restructure a portfolio of 31 hotels (4,097 rooms) in Australia. The agreement involves a portfolio that was purchased by the ADIA subsidiary in 2013 and operated by AccorHotels.
Under the restructure of the portfolio of 31 hotels, AccorHotels will convert 15 triple-net leases into 50-year management agreements and extend the management term of another hotel to 50 years. At the same time, AccorHotels' hotel ownership and investment arm subsidiary HotelInvest will acquire the real estate of the remaining 15 ibis- and ibis Budget-branded properties for AUD$200 million. ADIA's properties will include the 525-room Novotel Sydney Darling Harbour and 177-room Novotel and 212-room Pullman Sydney Olympic Park.
“This deal is in line with our stated strategy to optimize cash flow generation, reduce earnings volatility and restructure lease contracts into owned and managed hotels,” John Ozinga, COO of HotelInvest, said in a statement. “The acquisition of the economy hotels in key locations is a signal of our continued focus on supporting the Group’s growth strategy by holding a selective portfolio of profitable hotel property assets.”
The hotels are located in prime locations including Sydney’s Darling Harbour, Sydney Olympic Park and in Canberra, Australia’s Capital City. The portfolio is also spread across city and regional locations in New South Wales, Victoria, Northern Territory, Western Australia and Queensland and cover the Pullman, Novotel, Mercure, ibis, ibis Styles and ibis Budget brands.
As we've noted previously, Australia's hotel scene is hot. According to CBRE, the ADR at hotels in the country increased 1.6 percent to reach AUD$185 for the first three quarters of the year compared to the same period in 2015, and countrywide occupancy jumped to 75.7 percent, a growth of 1.1 percent.
The number of visitors to Australia has also increased by 11.5 percent to 8.1 million for the year ending October compared to the previous year, according to the Australian tourism agency.