Ascendas’s $1.4bn hotels portfolio for sale
Singaporean fund manager Ascendas has moved to offload a number of significant Australian hotels, placing its $1.4 billion hospitality portfolio on the market just weeks after another group based in the city-state said it would sell a string of landmark hotels valued at more than $1.5bn.
JPMorgan has been drafted as an adviser in the sales process, with the properties likely to attract the interest of sovereign wealth funds and other institutional investors at a time when the local market is experiencing growth in room rates and tourism numbers.
The portfolio is the second major group of hotels to hit the market within the month, and comes at the end of a sweltering 18 months in which deep-pocketed offshore groups have set benchmarks for Australian hotels, buying landmark properties and pushing transaction volumes to unprecedented highs.
Now there are signs that a wave of selling activity is graduating from single-asset sales to entire portfolios.
Earlier in December, M&L Hospitality, controlled by the Singapore-based Kum family, placed its 2089-room hotel portfolio, which includes Sydney’s Sheraton Four Points and Melbourne’s Hilton DoubleTree, on the market for as much as $2bn, in the first major hotel portfolio sale for more than a decade.
The hotel market has been one of the property sector’s best-performing asset classes in the past year, with increasing valuations leading to opportunistic sales of a number of major properties.
The performance has not gone unnoticed by a swag of offshore investors. Asian investment house Bright Ruby acquired the Hilton Hotel in Sydney this year for $442 million, while Singaporean developer Far East Organisation and the Hong Kong-listed Sino Land Company swooped on the five-star Westin Sydney at 1 Martin Place for $445.3m.
Recent research by Knight Frank shows about 88 per cent of the Sydney CBD’s four and five-star hotel stock is owned by offshore investors, a rise from 69 per cent in early 2010.
Singapore remains the largest investor country in Sydney’s hotel market, accounting for 29 per cent of rooms, while ownership by Chinese and Hong Kong investors has increased from “effectively zero” to 18.4 per cent, according to the Knight Frank figures.
Ascendas Hospitality Trust, listed on the Singapore stock exchange, last week said it was undertaking a strategic review after receiving an unsolicited expression of interest to acquire the trust, which is 25 per cent-owned by Ascendas.
Tan Juay Hiang, chief executive of Ascendas Hospitality Fund Management, said discussions were “at an early stage”.
“Accordingly, there is no certainty that any definitive agreement will be entered into and there is no certainty that any transaction will materialise from the current discussions,” he said.
However, The Australian understands an information memorandum has been circulating among investors, with hope of a concrete acquisition proposal by the end of January. AHT’s 11-property portfolio is most exposed to Australia, although it has a substantial investment in the Park Hotel Clarke Quay in Singapore, valued at $S312m ($305m).
Its most valuable Australian property is the Pullman and Mercure Brisbane King George Square, at $133.5m.
The trust recently acquired the serviced apartment component of the Aurora Melbourne Central apartment project developed by Malaysian firm UEM Sunrise for $120m. The 92-storey project, expected to be completed in 2019, will add 252 serviced apartments to the portfolio.
Ascendas has switched its focus to Australian industrial property in recent months, spending $76.6m to acquire a 38,549sq m property in the Sydney suburb of Greystanes.
Source: The Australian, Kylar Loussikian, Samantha Hutchinson, 29th December 2015
