Melbourne firm spends $150M on Brisbane hotel

The former Lennons Hotel Brisbane is operated by Singapore’s Next Story Group. Photo credit: Next Story Group(Photo credit: Next Hotels)

Melbourne, Australia-based financial firm Salter Brothers has acquired Next Hotel in Brisbane, Australia, from Sydney-based financial services company Challenger for $150 million, bringing the company's hotel portfolio to seven hotels with more than 2,400 rooms. The off-market deal was brokered by JLL’s Tom Gibson and Simon Rooney.

The former Lennons Hotel Brisbane is operated by Singapore’s Next Story Group. The 304-room property opened in 2014 following a $50 million refurbishment by SilverNeedle Hospitality. Challenger acquired it a year later for $133 million.

Salter Brothers has three Crowne Plaza hotels in Australia, in Melbourne, Coogee and Canberra. The company's hotel portfolio reportedly has a value of $1 billion.

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“The transaction represents a strong opportunity for us to enter the Brisbane market at this point in the cycle, as we expect the market to continue to recover in the coming years as new supply is absorbed,” Salter Brothers CEO Robert Salter told Australian real estate site The Urban Developer. “This property will provide Salter Brothers hotel group with long-term exposure to the improving Brisbane hotel market, underpinned by secure leases to high-quality tenants, delivering an attractive initial yield and ongoing steady cashflows.”

Speaking to The Australian Financial Review, managing director Paul Salter said the Brisbane market is on a rebound after absorbing "a lot of new supply." The company is focused on business hotels, which he believes are less affected by the growth of the sharing economy. “Melbourne has always stepped up to absorb new supply and Sydney is still a cracking market,” he said.