M&L Hospitality is selling its $1.5+ billion Australian and New Zealand hospitality collection. The Singapore-based Kum family has appointed Rothschild and UBS to market six hotel assets together, including Melbourne’s Travelodge Docklands, the Hilton Auckland, Christchurch’s Chateau on the Park, and Sydney’s Swissotel, as well as Sydney’s Sheraton Four Points and Melbourne’s Hilton DoubleTree.
The sale is expected to command a record price for an Australian hotels portfolio, and the Australian is calling it the biggest sale process in local hotel circles for more than a decade. This is notable as 2015's property sector was "dominated by large-scale portfolio sales to offshore buyers," the story notes. It also represents the emergence of the hotels market as one of the property sectors’ best-performing asset classes.
The 2,089-room portfolio generates annual earnings of more than $100 million and accounts for more than 18 percent of Sydney’s central business district hotel market. The selling company had reportedly been a candidate for a listing on either the Singapore Stock Exchange or the Australian Securities Exchange. The trust was promoted to Singaporean investors with a market capitalisation of about $609 million, and hotel values have since surged.
A spokesperson for the company did confirm the process, but did not guarantee that a sale would take place. M&L also plans to keep some hotels in Australia, including a Sydney hotel development site at 65 Sussex Street near Barangaroo.
Recent hotel sales in Australia have attracted record attention from Asia-based groups, the story noted. The weakening Australian dollar attracted international visitors to the major gateway cities, encouraging both domestic and international investment into the hotel sector. Foreign buyers made up more than 60 percent of the total $3.7 billion in hotel transactions recorded for the year to September, with the sector sitting as real estate’s best performer, delivering returns of 14.2 percent, compared to 12.9 percent for industrial, and retail at below 11.1 percent.