The record $620-million sale of the Travelodge hotel portfolio is the latest sign of soaring demand from global investment giants looking to check-in to Australia’s property assets on the verge of a market rebound.
Contracts were exchanged late last week to secure the deal, which is expected to be settled by the end of the year.
The acquisition of one of the largest hotel portfolios to be offered to the market in Australia is the first in a joint venture between Melbourne-based Salter Brothers and two of the world’s biggest property investment powerhouses.
Backed by Singaporean sovereign wealth fund, GIC, and Swiss global private markets investor, Partners Group, the purchase is an investment coup for Salter Brothers and a major confidence boost for Australia’s hotel and property sectors.
It includes 11 hotels—eight in Sydney, one in Melbourne’s Southbank, one in Brisbane and one in Perth—comprising 2032 rooms.
Significantly, a total of 18 bids for the portfolio were put on the negotiating table—the majority being strong offers from investment groups in the UK, Europe, Asia and the US.
“The Travelodge sale underscores the fact that Australia is now a recognised global investment destination,” said McVay Real Estate’s Sam McVay, who negotiated the deal.
“It’s recognised in the same way that America is, and Hong Kong is, and Europe is.
“There’s just so much demand for real estate in Australia at the moment. It’s attracting a lot of interest from international investors, more than we’ve ever seen.
“I think that’s got a lot to do with the fact that Australia, for the most part, has handled the pandemic very well and there is now a widely regarded view that when things reopen it’s going to bounce back stronger than it was.”
In a single transaction, the Travelodge acquisition almost doubles the number of rooms Salter Brothers has under management in its portfolio of hotel assets in Australia.
“We’d now have the most rooms under management in Australia,” said Salter Brothers founder and managing director, Paul Salter.
“It’s about 4200 rooms.”
Among its other assets are the Intercontinental Melbourne, Crowne Plaza Melbourne, Crowne Plaza Coogee, Holiday Inn Potts Point, Crowne Plaza Canberra, Hyatt Regency Brisbane and Voco Gold Coast.
Salter said the latest transaction created a platform of scale and geographic diversification across Australia, enabling the group to position for growth and add value to the portfolio via targeted capital expenditure and rebranding where appropriate.
He said following an operator selection process, the majority of the Travelodge portfolio of mid-market hotels would likely be “upscaled” and rebranded post settlement.
“Our view of it is that post vaccination, whether international travel opens up quickly or slowly, we think demand in the Australian domestic market will support strong rebound,” he said.
“That’s the way we underwrote this (deal) ... the vaccines will get rolled out in the next three to four months and then, hopefully, no more border closures and domestic demand can do its thing.
“And, if it turns out that international travel comes back quicker than expected, that’s an upside.”
Salter said the joint venture and its offshore partners were now looking to acquire more hospitality assets in Australia with a focus on “quality, well-positioned CBD hotels where we think the bounce back is going to happen”.
“They see this as a good market to be invested in, that’s for sure,” he said.