Commercial

Auckland hotel sale biggest ever

The biggest hotel deal in New Zealand’s history has seen Auckland’s Stamford Plaza sold for a record $170 million.

Wednesday, October 12th 2022

Transacted by JLL, an international consortium bought the five-star Albert Street hotel. It includes New Zealand’s biggest hotel owner, CP Group, with a global portfolio of more than 50 assets, global investment firm Alvarium Investments, via its locally owned Auckland office, and Archipelago Capital.

The Stamford Plaza Auckland sale equates to more than $700,000 per room - across 286 rooms and suites - once planned refurbishments are completed.

The Stamford Plaza, which, was originally branded as The Regent, has been managed and operated by Stamford Hotels & Resorts as part of the Stamford Group for the past 27 years. The group says the hotel was especially hand-picked by group chairman CK Ow during his strategic acquisitions in the 1990s throughout Australasia.

In October 2008, the Stamford Group not only upgraded the hotel, but added 149 ultra-high-end luxury apartments, contributing to the change in the city-landscape.” says Thomas Ong, chief operating officer.

Plans to refurbish and rebrand the five-star Stamford Plaza under a major international name are already underway, although branding is still to be decided.

The sale will be settled late this year.

The last equivalent hotel transaction in New Zealand in excess of $100 million was in 2006 when the Rendezvous Hotel, now the Grand Millennium Hotel, sold for $113 million, via JLL agents.

Just over a month ago, Sir Stamford Circular Quay in Sydney sold for A$210.5 million, equivalent to more A$2 million per room. Two Stamford asset sales in major city centres indicates Australasia is seen as a safe destination to add to portfolios, says Nick Thompson, JLL NZ hotels and hospitality director. “The divestment of these non-core assets demonstrates the high quality of the wider Stamford portfolio.”

Thompson says finalising a deal of this magnitude proves there is a strong appetite across the hotel sector thanks to positivity in the market despite recent turbulence in the economy.

“The hotel market is going upwards following two years of uncertainty, and that movement is indicative of the strength of the market,” he says.

“Hotel investors tend to take a longer-term approach to asset transactions, so hotels hold up strongly when headwinds impact other real estate sectors,” says Thompson.

“The Stamford Plaza sale is a record sale for a single hotel asset in New Zealand, pointing to the resilience of the hotels market complemented by continued interest from international investors over the past 30 months,” he says.

“For the consortium, purchasing a 5-star hotel in Auckland’s CBD at a time when the market is rebounding represents a fantastic opportunity.”

CP Group says now is the right time to buy in the New Zealand market following the opening of international borders and stability of the commercial property sector.

Alvarium Investments founder and global co-chair Andrew Williams considers the investment an important strategic decision to add a premium Auckland hotel to Alvarium’s existing real estate assets at an opportune time to capitalise on market conditions.

“We see New Zealand as a secure real estate market, buoyed by a rebounding hospitality and tourism sector, and well-positioned post the peak of the pandemic,” says Williams. “This co-investment aligns with our long-term approach of working with teams that have a proven high-performing record to drive returns for our clients and our firm through timely investment opportunities.”

Stamford Group says the sale represents a recalibration of the group’s investment strategy, which has made in-roads into other real estate classes within the global marketplace, such as trophy asset properties in London.

Thompson says visitors to New Zealand, particularly tourists, tend to stay longer given the travel time required to access the country. “This makes hotel assets desirable investments, particularly in Auckland where 70% of international travellers land as the gateway to the rest of the country.”

Heading into the final quarter the year, Thompson says a number of other major hotel transactions are expected to be announced before year’s end.

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