Heritage listed Darling Harbour hotel snapped up for around $55M
Shakespeare Property Group will pay approximately $55 million for a prime Darling Harbour hotel.
The real estate arm of Melbourne-based fund manager Prime Value will take over the 90-room, four-floor heritage-listed Woolstore 1888 hotel.
Notably, the hotel was built as a wool store in 1888. It is the fourth-oldest of 21 surviving wool stores in Sydney.
This is the second major hotel acquisition in Sydney, following the $215 million purchase of the InterContinental Hotel in Double Bay by a group of developers.
The hotel has been owned by Boutique chain Ovolo, which purchased the property in 2014 from Paul Fischmann’s 8Hotels.
Fischmann spent millions on redevelopment, but it retains its industrial feel with high ceilings, period windows and a seven-storey atrium.
Shakespeare Property Group is talking with potential operators to run the hotel and will raise equity from wholesale investors via a single-asset unlisted trust to be called the Shakespeare 1888 Trust to fund the hotel acquisition.
A total return of 16% has been targeted, which includes an initial distribution yield of 6 per cent, rising to more than 8 per cent from the third year.
The hotel joins the Pullman Cairns International hotel in North Queensland, office properties in Sydney, Brisbane and Melbourne and residential developments on Melbourne’s St Kilda Road as part of Shakespeare’s portfolio.
Prime Value has more than $3 billion of assets under management.
The Woolstore 1888 sale was brokered by Michael Simpson, Wayne Bunz, Steve Carroll and Hayley Manvell of CBRE.
“The Woolstore 1888 is a stunning hotel asset which is in great condition, in a great location, and doesn’t require major capital expenditure for us to realise its full potential,” Richard Saab, vice president of hospitality assets and investments at Shakespeare Property Group, said.
“We think there is scope to improve the asset. But we also think this property speaks for itself, as one of Sydney’s finest heritage hotels.”
Sydney is seeing rapidly growing demand in the boutique and lifestyle accommodation market, which has translated into revenue per available room – revPAR, the key performance metric – of $301 a day, compared with $241 in Melbourne and $219 in Brisbane.
“The Sydney hotel market is attractive and has shown strong recovery since COVID,” Saab said.
“We’re also seeing rapidly growing demand in the boutique and lifestyle accommodation market, and the Woolstore 1888 is well-placed to capture this growth.”
For Ovolo, the sale means it can focus on new markets across the Asia Pacific.
Jonathan Jackson, 18th April 2024
