Colliers International secures iProsperity Group for largest metropolitan hotel east of Melbourne CBD
One of Melbourne’s best-performing hotels, the Novotel Melbourne Glen Waverley, has sold for $73,666,666.66.
Colliers International’s Gus Moors, Neil Scanlan and Guy Wells negotiated the transaction with Sydney-based investment firm iProsperity Group, following an expressions-of-interest campaign.
The deal comes after the firm’s recent acquisition of 333 Kent Street in Sydney for $88,888,888million.
The Novotel Melbourne Glen Waverley had been owned for almost 20 years by a private syndicate, which is subject to a triple net lease to Accor Asia Pacific due to expire in July, 2018.
“The unique offering of a limited fixed-lease term with vacant possession thereafter resulted in strong interest from owner-operators and investors having existing relationships with hotel management companies,” Mr Moors said.
“Traditionally hotels operate under management agreements whereby returns to an owner vary depending on performance of the asset. The near term vacant possession allows the incoming purchaser the option of retaining Accor or changing the branding and/or operating entity of the hotel.”
Located at 285 Springvale Road, Glen Waverley, the Novotel Melbourne Glen Waverley comprises 200 upscale rooms, a spacious bar and restaurant, flexible meeting space, well-equipped gym, indoor pool and underground parking for about 100 cars.
Within close proximity of Kingsway and The Glen Shopping Centre, it is the only internationally branded upscale hotel east of Melbourne’s CBD and St Kilda and as a result, attracts a strong corporate clientele during week.
“The surrounding corporate offices and business parks within the city of Monash are strong drivers of performance for the hotel,” Mr Wells said.
“The purchasers view the asset as having trading upside in years to come, with the exposure to the business performance going forward.”
Mr Moors said the sale reflected solid buyer demand in the Melbourne hotel market, with major hotels a rarely offered asset type in recent years.
“Capital flows have continued to move from Sydney towards Melbourne during 2016,” he said.
“While the Sydney market witnessed significantly more transactional activity over 2014/15, Melbourne has had a strong finish to 2016, with the sale of the Novotel on Collins and the Travelodge Docklands, which was also sold by Colliers International.”
Mr Wells said a continued appetite for hotel and accommodation assets was expected in both cities during 2017.
“Looking at Melbourne over 2016, the city has witnessed stable occupancy and rates, which are testament to the underlying strength of the market, noting that 2016 has not seen the large conventions and events hosted in 2015,” he said.
“Investors view the underlying market fundamentals as strong and when this is coupled with Melbourne’s excellent track record of absorbing supply, the outlook is viewed very favourably.”