Sale signals new dawn for Australian hotels

Australia’s accom sales are picking up as the federal election dust settles, with Salter Brothers buying Brisbane’s Next Hotel and associated retail space on Queen Street Mall for $150 million.

Simon Rooney from JLL Hotels, who helped brokered the deal, told Commerical Real Estate it was “one of a wave of deals” in the pipeline for hotels with attached shopping centres or office towers, as buyers look beyond traditional commercial property for higher returns.

Mr Rooney said mixed-use CBD retail assets in prime locations were in high demand, citing Dexus’ purchase of a half stake in the MLC Centre in Sydney for $800 million and then 80 Collins Street in Melbourne for $1.48 billion.

The Next sale, which completes in July, comes as four strong buyers are rumoured to be circling the $400 million Sofitel Sydney Wentworth Hotel with a view to snapping up one of the city’s last remaining dowager properties.

Paul and Robert Salter’s purchase of the 304-room Next property brings their hotel portfolio to more than 2400 rooms worth an estimated $1 billion, including seven hotels across Sydney, Melbourne, Canberra, Brisbane and the Gold Coast. 

Formerly Lennons Hotel Brisbane, the 4.5 star hotel opened in 2014 following a $50 million refurbishment under the management of Singapore’s Next Story Group.

“The transaction represents a strong opportunity for us to enter the Brisbane market at this point in the cycle, as we expect the market to continue to recover in the coming years as new supply is absorbed,” Robert Salter told The Urban Developer.

“This property will provide Salter Brothers Hotel Group with long-term exposure to the improving Brisbane hotel market, underpinned by secure leases to high quality tenants, delivering an attractive initial yield and ongoing steady cashflows.”

While the Australian hotel market continues to grow nationally, Brisbane is an increasingly attractive proposition for investors finding it difficult to establish a foothold in the traditional strongholds of Sydney and Melbourne.

The city is undergoing $12 billion of private and public infrastructure improvements, including a new airport runway, cruise terminal and underground railway development, and has experienced a number of recent luxury boutique developments, including the W. Brisbane, The Calile and Emporium South Bank.

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