China’s Sunshine Insurance Group buys Sheraton on the Park for $463m
Sheraton on the Park, Sydney, is now in Chinese hands. Source: SuppliedBEIJING-based insurer Sunshine Insurance Group has paid a record $463 million to buy Sydney’s Sheraton on the Park hotel in its first real estate acquisition in Australia.
The 557-room hotel fronting Hyde Park attracted suitors from Singapore, Malaysia, the Middle East and mainland China, said selling agent Craig Collins chief executive officer of Jones Lang LaSalle Hotels, Australasia.
The sale is a key marker for Chinese investment in Australia as it represents the first large acquisition of a commercial property by an insurance group after rules for offshore investing were relaxed.
Speaking from Shanghai last night, Mr Collins said there had also been some local interest in the five-star hotel, which was sold by US hotel giant Starwood with a long-term management agreement in place. Starwood has amassed $US1.5 billion over the past three years from the sale of its hotels, including the Sheraton on the Park.
“We are pleased to advance our asset-light strategy with the sale of the iconic Sheraton on the Park hotel and look forward to working closely with SIG to ensure its continued success,” said Simon Turner, president of global development for Starwood.
“The terms of this sale underscore the strength of the Sheraton brand and the success of this hotel, as well as the tremendous value of this property in a high-barrier-to-entry market.”
Starwood Pacific director of acquisitions and development Andrew Taylor said SIG had committed to a $40m renovation of the hotel.
“This will see the Sheraton on the Park’s position as a leading hotel in Sydney maintained for the long term future,” Mr Turner said. “This takes the price per key up significantly with the additional renovation costs.”
Sunshine added that the Sheraton on the Park would help diversify the group’s holdings by “giving us a trophy asset in Sydney”.
It is understood that under the terms of the sale, Starwood required the purchaser to sign a management agreement of up to 50 years. The hotel was developed in the 1990s by Andrew Richardson after he acquired sites between Elizabeth and Castlereagh Streets.
Meanwhile, Starwood continues to expand its management agreements, operating 14 hotels here including Four Points by Sheraton Brisbane and Sheraton Melbourne. In the next few years it will open Aloft Perth Rivervale, The Westin Perth and W Brisbane.
Source: The Australian - 22 November 2014
