Sale of Four Points by Sheraton continues real estate renaissance

The 297-room Four Points by Sheraton in Sydney has found an offshore buyer.

The purchaser will pay owner and hotel tycoon Jerry Schwartz between $150 and $160 million, as it plans to boost its exposure in Australia, which has Australia has one of the strongest property markets globally, despite COVID-19 having an impact.

The Four Points by Sheraton Sydney, Central Park, which opened in 2018, is located close to Atlassian’s planned new headquarters and will form part of the larger Central Park mixed-use scheme.

While this week’s average occupancy was only 35 per cent, it is expected that the hotel will return to an average occupancy of 85 per cent in the coming months – once the virus is fully under control.

Certainly, sales of major properties seem to have ramped up in the last few weeks.

Sale of the Sheraton follows the recent acquisition of the luxury Primus Hotel by investment firm Pro-invest which paid about $132M.

However, the Australian Hotels Association said earlier this week that Sydney hotels had suffered terribly in 2020 “and if the first few months of this year are any indication, things are not going to get better in a hurry”.

This is contrary to current market sentiment.

Yet, according to Managing director of hotel consultant Dransfield Hotels & Resorts, Dean Dransfield there is a disconnect between the short-term trading market and the short-term capital market and this puts a different spin on things.

Essentially hotel properties currently have more interest than office space.

Dransfield is currently advising on half a dozen new hotel projects, which he believes stack up, even though this crisis and buyers can secure properties at a slim discount of around 10%.

“Hotels look better than retail and offices now from a relative point of view,” with investors chasing those with business clients rather than tourism, Mr Dransfield said. “The capital markets are genuinely not concerned, on a selective basis.”

8th March 2021