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Mercure Sydney International Airport sold for $74.6 million

The Mercure Sydney International Airport has changed hands with Folkestone’s real estate funds management subsidiary, Folkestone Funds Management acquiring it for $74.6 million.

The 271 room hotel was part of the Accor group, operating under its Mercure banner.

It is located approximately one kilometre from the Sydney Airport International Terminal, three kilometres from the Sydney Airport Domestic Terminal. It is nine kilometres from the Sydney CBD.

Folkestone is planning a major overhaul of the hotel to turn it into an earner.

It is planning a refurbishment of function areas, guest rooms, and the ground level bar and restaurant on the ground floor and a total repositioning of the hotel to drive revenue. There are also plans for improvements to the Hotel’s façade and external features to enhance its appearance, and an upgrade of plant and equipment to improve the hotel’s operational efficiency.

According to Folkestone’s managing director Greg Paramor, the Sydney hotel market is in a solid position for growth.

“The Sydney hotel market remains strong, driven by both domestic and inbound tourism, growing corporate travel and a buoyant conference and exhibitions market which has been enhanced following the opening of Sydney’s new International Convention Centre,” Mr Paramor said.

“We believe there continues to be strong demand from investors for quality hotel investments in Sydney.”

The Fund secured underwriting commitments totalling $31.9 million to assist with the acquisition of the hotel.

Folkestone says $15.0 million has been provided by the company, all part of its strategy to use its balance sheet to secure attractive investment opportunities for its funds management platform.

Folkestone also secured a $49.4 million debt facility from a major Australian bank which will provide the balance of funds required to acquire the Mercure.

The transaction includes a $15 million short term debt facility whilst Folkestone completes fund raising activities.

by Leon Gettler, October 13th 2017