Tucker Box Group to sell 2000 rooms for $600M

Mirvac and NRMA Tucker Box Hotel Group have announced a joint venture to sell 2000 rooms for an estimated $600 million. 

The mutual commitment to sell the entire portfolio comes after the collapse of Mirvac’s plan last year to sell its interest in the Tucker Box Hotel Group. 

“All properties are currently leased and managed by Value Lodging Pty Limited, a subsidiary of Toga Far East Hotels and also have the option for vacant possession upon sale,” Mirvac said. 

Facilitating the sale will be Credit Suisse and hotel broker McVay Real Estate. 

“Given the expected demand for affordable accommodation and the forecast improvement in domestic travel, both NRMA and Mirvac have elected to commence a process to explore the interest in this portfolio, from both domestic and international investors and operators given the prime locations, weighting toward the attractive Sydney market and scale of the platform.” 

Last month, it was revealed in Mirvac’s annual report that the pandemic had severely affected the Tucker Box Hotel Group, leading to a notable reduction in cash flow and valuations of the hotel investment properties. Some contracts for hotel quarantine with certain state governments had helped slightly whilst waiting for borders to re-open and tourism to resume. 

According to accounts, the properties had decreased in value from about $583 million to $520 million, blaming the pandemic for a detrimental impact on occupancy of the hotels and the profit of the venture substantially dwindled with operating profit falling from $34 million in fiscal 2019 to $20 million last year. 

By 30 June, the Tucker Box joint venture had complied with all borrowing covenants. 

“However, based on estimates made at 30 June 2020, it is considered likely that due to the impact of COVID-19, the Tucker Box Hotel Group will breach a lending covenant within the next 12 months,” the accounts said. 

The Tucker Box Group owns three Travelodges in Sydney’s CBD and hotels in Manly, Macquarie Park, Bankstown and Blacktown. The portfolio further extends to Newcastle, Melbourne, Brisbane and Perth. 

When the portfolio consisted of 12 hotels with 2027 rooms, Mirvac had the properties valued at $614 million before selling the Rockhampton property last year.