IN-DEPTH: LaSalle fund sells iconic hotel in Sydney CBD

LaSalle Investment Management has agreed to sell its 100 percent shareholding interest in Sofitel Wentworth Sydney to Frasers Centrepoint.

THE DEAL

The sale was made on behalf of the LaSalle Asia Opportunity Fund III, a $3 billion opportunistic fund that closed in 2008. The fund purchased the hotel in 2010 for approximately A$140 million ($130 million). JLL represented the seller.

Terms of the transaction were not disclosed, but, according to Real Capital Analytics, the new owners paid approximately A$202.7 million, or A$464,908 per unit ($188.3 million/$431,774 per unit).

THE ASSET

The 17-story full-service hotel was built in 1966 and renovated in 2004. Located in the financial heart of the city’s central business district, Sofitel Wentworth is Sydney’s “grande dame” hotel, offering 436 five-star guest rooms and 45 luxury suites. It is surrounded by Sydney’s premium office buildings and is well positioned to capture surrounding corporate clients, both for accommodation and meeting needs.

THE MARKET

According to STR Global's preliminary hotel data, Sydney’s hotel sector enjoyed several positive performance trends recently. Demand for Sydney picked up in May while supply growth continued to slow, leading to occupancy levels in excess of 80 percent for the fourth consecutive month.

The report states there were increases in supply (up 1.2 percent) and demand (up 5.0 percent); a 3.7 percent increase in occupancy to 80.8 percent; a 4.9 percent growth in average daily rate to A$191.50 ($180); and a 8.9-percent increase in revenue per available room to A$154.78 ($145).

In terms of money spent on Australian hotels, Singapore leads Asian investors by more than two times Hong Kong, which places second, followed by Malaysia. Mainland China is in the fifth spot.

There has been acceleration in Chinese investors entering the Australian hotel sector. In the past three years, there have been eight major hotel investments involving first-time investors from China.

Earlier this year, Shanghai-based Greenland Group launched a property project costing more than A$600 million ($564 billion) in Sydney.

Mainland Chinese investors bought more than 970 hotel rooms in the past three years for A$287.3 million ($270 million), according to the South China Morning Post. And Hong Kong investors spent A$617.2 million ($580 million) for 1,667 hotel rooms over the same period.

THE PLAYERS  

LaSalle has more than 30 years of experience investing in private and public real estate through a complete range of investment vehicles. In Asia Pacific, it has $4.8 billion of assets under management and operates seven offices in the region.

Frasers Centrepoint is a full-fledged international real estate company and one of Singapore’s top property companies with total assets of approximately S$11.4 billion ($9.12 billion) as of March 31.