Developments

Darwin’s new international hotel listed for sale

Elan Soho Suites, Darwin’s brand new 4½-star CBD hotel and serviced apartments tower, is being offered for sale by its developer, Gwelo Group.

Resort Brokers Australia and Bali-based Prime Resort Services have been jointly appointed to handle the sale through an international expressions of interest campaign due to close on May 15.

Trudy Crooks of Resort Brokers and Steve Dawson of Prime Resort Services, say the newly opened 27-storey CBD Elan Soho Suites will draw keen interest from offshore and onshore investors, including hotel companies wanting entry into the lucrative Darwin market, private equity groups and hedge funds.

The significant offering includes two components with 301 keys and 259 car parks, comprising the freehold ownership of 168 hotel rooms on 88 titles plus the management rights to 133 investor-owned apartments. Also included in the freehold are the hotel’s large conference facility for up to 410 guests, street-front restaurant, podium level pool and gymnasium, reception, back of house and 126 guest car parking spaces.

The management rights component, covering 123 two-bedroom and 10 one-bedroom apartments with 133 associated car spaces, has a new 25-year caretaking agreement in place.

Elan Soho Suites has been established by major Northern Territory developer Gwelo Group, and is currently owner-operated in ‘soft opening’ mode, due to be fully operational next month. Projected figures based on trading at 75.8 per cent occupancy, which is just under Darwin’s current CBD average annual rate, show the property offering a forecast EBITDA (earnings before interest, taxes, depreciation and amortisation) of more than $7 million per annum.

“It is incredibly rare for a brand new capital city hotel of this calibre to be offered for sale,” Mr Dawson said. “Doubly attractive to potential buyers is the fact no hotel management contract is in place, so an incoming owner can select their preferred operator and brand it from scratch.”
“At last count there were over 780 hotel brands worldwide and that number is climbing.

“Big players like Hilton, IHG, Wyndham and Accor are no longer content with a handful of core brands, and competition to secure a trophy CBD property to launch a brand in Australia or build brand awareness has never been more intense,” he said.

Ms Crooks said the Darwin market, in such close proximity to three billion of the world’s population and underpinned by burgeoning oil and gas industries, would attract bids both from within Australia and offshore, particularly South East Asia.

“Darwin is the supply, service and distribution hub for major projects in Northern Australia, the Timor Sea and South East Asia,” she said. “It is also a city of tremendous cultural heritage and tourism appeal, and Australia’s second fastest growing capital city.

“Average daily rates have continued to show Australia’s fastest ADR growth, sitting at $200 for calendar year 2014, equaling Sydney and eclipsing the Gold Coast, and they are forecast to maintain robust growth of around 4 per cent per annum,” she said.

The listing of Elan Soho Suites follows hot on the heels of the sale of Rydges Darwin Airport Resort and Hotel to Singapore-based private equity group SC Capital for a reported $84 million. Gold Coast-based Freespirit Group has just paid $23.5 million for an 11.25ha cabin and holiday park resort it already managed in the Darwin suburb of Holtze.

Ms Crooks said Resort Brokers had sold a number of accommodation properties of varying types and sizes in the region in recent times and the level of enquiry for each had been “phenomenal”.

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