Veriu Central Hotel to attract keen investor interest with premium location and development upside
Colliers International’s Gus Moors, Karen Wales and Joseph Lin have been appointed to bring to market the Veriu Central Hotel at 75 Wentworth Avenue in Sydney on behalf of the Veriu Group. The hotel is being offered on a sale and leaseback basis.
“The opportunity to secure such well-located properties is incredibly rare, and when coupled with the security of the leases and potential development upside, Sydney has not witnessed such a quality investment opportunity for a long time,” Mr Moors said.
“Located on the corner of Wentworth Avenue and Elizabeth Street, Veriu Central Hotel captures a broad variety of demand through its proximity to major commercial towers, the International Convention Centre (ICC), Chinatown, as well as the vibrant dining, entertainment and creative precinct of Surry Hills.”
The hotel features 112 recently renovated rooms wrapped within a stunning heritage façade. It occupies the ground floor reception and four levels of above ground accommodation. The building also houses four other tenancies on the ground and lower ground levels, all of which are complementary to the hotel offering. The hotel and the tenancies have received extensive renovations over the past 5 years.
“As a result, an incoming purchaser has no medium-term capital expenditure requirements, and is set to benefit from these recent works,” Mr Moors said.
Ms Wales said the current owner was exploring potential development opportunities for the site, with two different schemes adding between 42 and 93 extra rooms above the current building envelope.
“The building is being offered for sale with the benefit of a long-term lease to Veriu, a well-established and professional hotel operator, with 42 properties including 20 stand-alone hotels spread across Sydney, Brisbane and Melbourne,” Ms Wales said. “Veriu Central delivers location, a stable income with turnover upside, diversity and development potential – the combination of which makes this an outstanding opportunity.”
With easy access to Sydney’s Central Railway station, the hotel captures strong demand from airport and intrastate travellers.
Mr Moors said the Sydney CBD hotel market was arguably one of the best long-term accommodation markets in Asia Pacific.
“The city achieved an occupancy above 87% in 2018, with an average rate of over $260 – this is a 26% premium to the second-placed Melbourne market, and helps cement Sydney as the premier hotel investment market in Australia,” he said. “The supply outlook is benign and tourism generating infrastructure in the form of the International Convention Centre, Crown Casino and Barangaroo will broaden the appeal of the city for visitors.
“The City is also revitalising its transport infrastructure with the new light rail along George Street opening in 2020 and an underground metro system opening in 2024.
“Being in close proximity to this new transport infrastructure, Veriu Central guests will be able to access all parts of the CBD within minutes, ensuring a wider base of demand which transcends the current location.”
Sydney received almost 4.1 million overnight international visitors in 2018, spending over $9.7billion and contributing almost 82 million visitor nights. The city is highly regarded by international visitors with visitors and visitor nights increasing by 3.2% and 2.5% respectively year-on-year.
Ms Wales said Sydney was a very tightly held hotel ownership market, with only two CBD hotels transacting in 2018 and only 10 CBD properties selling below $100 million over the past five years.
“The Sydney City accommodation market now comprises approximately 23,553 accommodation
rooms and, given the record high occupancy levels, has greater capacity to absorb new rooms,” she said. “ While there are new rooms coming into the Sydney City hotel market, the pace of openings is considerably slower than in other Australian state capitals.
“Projects in the pipeline now face a changed development environment which may see fewer progress than previously anticipated. Further office stock withdrawals are not anticipated given the current strength of Sydney’s office market and opportunities for new hotel development will remain constrained as a result.
“Of the supply which will come to fruition, it is worth noting that the vast majority is graded upper upscale or above, meaning that the Veriu Central will continue to be the best located upscale boutique/lifestyle hotel within the Sydney CBD core for the foreseeable future.”