Foreign groups in Sheraton mix
Sheraton on the Park hotel in Sydney is one of the top three performers in the region based on revenue per available room. Source: Supplied
STARWOOD Hotels and Resorts is fielding dozens of offers for its Sheraton on the Park hotel in Sydney’s Elizabeth Street that could net it as much as $465 million, but it is insisting on imposing a management agreement of up to 50 years on the buyer.
With an average occupancy of more than 90 per cent in recent years, the hotel is one of the top three performers in the region based on revenue per available room.
Expressions of interest in the 557-room hotel closed on June 20, several players tipping it will be sold to a Singapore-run real estate investment trust at a big price.
But there are other potential buyers in the wings including the owner of the Hilton Melbourne South Wharf, the giant US Host Hotels & Resorts.
China’s Sunshine Insurance Group and Abu Dhabi Investment Authority, Indonesian businessman Sunardi Loekman and at least one other group are in the mix.
Jones Lang LaSalle Hotels chief executive Craig Collins, who is marketing the property, declined to comment.
Others have suggested that Singaporean REITs will play a role, though funding such a large property may be beyond them.
“There is a lot of interest in the Sheraton on the Park,” said one hotel stalwart.
“The Sofitel Sydney Wentworth was sold to Frasers which has just launched an REIT in Singapore.”
Frasers Hospitality chief executive Choe Peng Sum said the group saw Australia as a safe investment destination after it bought the Sofitel Sydney Wentworth for $202m, and it is expected to inject further sites into the new Singapore-listed fund, for which it is raising $S365.2m ($312m).
Sheraton on the Park managing director and Starwood regional vice-president Sean Hunt said there had been strong interest from different types of investors. “(But) it will only be sold with a long-term management contract. And it will only be sold to the right owner,” he told The Australian.
Meanwhile, Mr Hunt confirmed Starwood was interested in operating the two sandstone buildings in the heart of Sydney’s CBD that the NSW government is trying to sell.
“We have had parties talk to us, we are very interested, we have nine international luxury brands and only three are represented in Sydney,” he said. It is understood Starwood is keen to introduce a St Regis, a W and a Luxury Collection hotel to Sydney.
Starwood will open six hotels in the region this year and next month will announce another two properties slated for Australian capital cities. It has already announced that listed Singaporean developer Hiap Hoe will build a Four Points by Sheraton at Melbourne’s Docklands opening in 2017.
Hiap Hoe will run a second property in the Melbourne CBD under Starwood’s Aloft brand.
Mr Hunt said the newly opened Sheraton Melbourne in Little Collins Street and the Four Points by Sheraton in Mary Street, Brisbane, had been profitable from the first month of operation.
Other major hotel operators also have their eyes on Sydney. It is understood Ritz Carlton, with the backing of an Asian owner, is interested in the sandstone-clad NSW Department of Planning and Education buildings.
Source: The Australian - 26 June 14
