Outrigger sells Australia business to Mantra Group

The transactions market is firing on all pistons, as we learned of today in Australia, a country that continues to show a frenetic pace of hotel trading and development.

Australia-based Mantra Group Limited has entered into an agreement to acquire Outrigger Hotels & Resorts Australia for $29.5 million, subject to customary completion adjustments and conditions. The properties invloved in the transaction are:

  • Outrigger Surfers Paradise
  • Outrigger Twin Towns Resorts, Coolangatta
  • Outrigger Little Hastings Street Resort & Spa, Noosa
  • Boathouse Apartments by Outrigger Airlie Beach

As a result, Mantra Group is launching a fully underwritten institutional placement to raise approximately $50 million to assist in funding the Outrigger acquisition as well as providing Mantra Group with additional capital to fund identified pipeline opportunities.

FREE DAILY NEWSLETTER

Like this story? Subscribe to IHIF!

The hospitality industry turns to IHIF International Hotel Investment News as the must-read source for investment and development coverage worldwide. Sign up today to get inside the deal with the latest transactions, openings, financing, and more delivered to your inbox and read on the go.

The hotels comprise a total of 984 keys under management, and, as Mantra Group CEO Bob East, the transaction is aligned with the group's growth strategy to deliver shareholder value.

"It is a natural fit for Mantra Group, extending the [our] footprint in key leisure destinations," he said. "This acquisition is complementary to our existing portfolio and, together with future pipeline growth initiatives, is expected to supplement Mantra Group's strong organic growth with incremental earnings."

Though unclear from the statements on the deal, it appears that the transaction only includes management rights, not the real estate, though HM is confirming.

According to The Australian, Mantra Group won a fierce battle for the properties, beating out Accor and Wyndham. East told The Australian that it's likely the Surfers Paradise, Coolangatta and Airlie Beach properties would be rebranded under the Mantra flag, while the Noosa resort would be rebranded under the upmarket Peppers name.

Nancy Daniels, director of PR of Hawaii-based Outrigger Enterprises Group, explained that the sale of the properties was a "strategic realignment of our portfolio to better match the Outrigger Resorts brand which focuses on premier beachfront destinations."

She added that the transaction does not include the sale of the Outrigger brand name nor the right to use the Outrigger brand in Australia.

"While our Australia portfolio included properties located in coastal destinations, they did not meet the criteria of being located directly on the beach," she added. 

Mantra said the acquisition was aligned with the group’s growth strategy and would lift its portfolio to more than 17,000 rooms under management. The deal is expected to close by June.

Beyond this transaction, Australia continues to thrive in hotel transactions and development. China's Wanda Group is developing a $1-billion mixed-use project in Sydney and Sunshine Insurance Group, also based in China, recently acquired the Sheraton Sydney for around $400 million.

Suggested Articles

The hospitality arm of Frasers Property Group is planning to grow its Malmaison and Capri by Fraser brands over the next three to five years.  

The hotel is kicking off a brand that is poised to grow across both Israel and Western Europe.

A new report produced in collaboration with the Puerto Rico Tourism Co. outlines ways the island is attracting investment.