Could Sydney hotels be back on the market?
Australia’s hotel market looks to be in revival mode, with Sydney CBD’s Primus Hotel being listed by China’s Greenland Group with a $170 million asking price.
A $200 million Accor Invest Australia portfolio is also back on the market after its sale to investor Michael Gu fell through.
The Primus Hotel is seen as a test case for all Sydney CBD hotels, many of which are still struggling from the effects of COVID-19 shutdowns.
Hoteliers will use the Primus Hotel to gauge their options moving forward: to sell or take on partners to ease operational burdens.
It is expected the five-star market will move first.
Greenland Australia managing director Sherwood Luo said, “Given the numerous recent unsolicited approaches received from both hotel investors and operators Greenland Australia has decided to offer Primus Hotel.”
Primus was developed as a 172-room hotel and was part of a larger project including a sold out adjacent apartment complex.
“The Primus Hotel is the first major five-star Sydney hotel to be offered in many years, and given the scarcity of such opportunities will be highly sought-after by an array of domestic and offshore investor,” JLL Hotel and Hospitality’s Mark Durran said.
While this is positive news, the pandemic has rocked the market with some very significant deals collapsing as a result including last year’s 17-strong Accor Invest Australia portfolio.
iProsperity Group’s CEO Mr Michael Gu had agreed to buy the portfolio and even re-cut a deal as his property empire was crumbling.
Mr Gu, who has now been labelled the “new Christopher Skase”, fled the country recently and is reportedly residing in Los Angeles, is alleged to owe investors around $350 million. Mr Gu took out $21 million in loans using company money and used millions of dollars of company funds to purchase Vanuatu passports through the Pacific Island nation’s own visa program and luxury vehicles including a Rolls Royce Wraith and Lamborghini.
The Accor properties are country-wide and include the Ibis Melbourne hotel and apartments, and the Ibis Sydney Airport hotel, plus a range of regional assets in Coffs Harbour, Newcastle and Dubbo.
JLL Hotels are the selling agents and have declined to comment to media.
Other deal to fall through include Singapore group SC Capital Partners’ Sydney’s mixed use Bligh House office building, which will now only be refurbished.
The refurbishment is being touted as high-end and is expected to be completed by October.
Good news for tenants as rents will be at a significant discount to surrounding high rise buildings.
Plans permitting a 59-level tower with about 420 hotel rooms and 5800sq m of office space, do still exist if the owners wish to act.
SC Capital managing director Andrew Heithersay said “Given the superb location, unique building attributes and strong rental value proposition, we are confident the leasing campaign will be very well received by prospective occupiers.”
Irit Jackson, 7th August 2020
