Three CBD Marriott hotels up for sale

Global hotel investor interest will be sparked following the announcement that Colonial First State Global Asset Management will sell the three five-star Marriott hotels in Sydney, Melbourne and Brisbane that comprise its unlisted Commonwealth Property Hotel Fund. 

The hotels that will be put on the block are the 28-storey Brisbane Marriott acquired in June 2000, located at the Northern End of Queen Street and comprising 267 rooms; the 34-storey Sydney Harbour Marriott at the northern end of Pitt Street acquired by the fund in April 2001 and comprising 550 rooms and the 186-room Melbourne Marriott on the corner of Exhibition and Lonsdale streets in the theatre precinct acquired in February 2001. 

The Sydney Harbour Marriott is the most valuable asset in the portfolio, comprising 58% of its value. 

A global marketing campaign exclusively led by Jones Lang LaSalle Hotels Craig Collins and Mark Durran will commence in early 2012. 

In late 2009, the fund sold the Surfers Paradise Marriott Resort & Spa for about $75 million to Indonesia’s Rajawali Group. 

John van der Wallen, fund manager for Commonwealth Property Hotel Fund, says the proceeds from that sale were used to pay down debt and to fund “extensive refurbishment works to set the remaining hotels up for the sale process”. 

The fund spent $18 million refurbishing the Sydney Harbour Marriott and $10 million on the Melbourne Marriott. 

“Refurbishment works included upgrading room accommodation, telecommunication and internet systems in Sydney and Melbourne, upgrading restaurants and bars in Sydney and Brisbane, while the façade and entry to the Melbourne Marriott is currently being improved,” van der Wallen says. 

Van der Wallen says the sale of the hotels “is in line with the realisation strategy of the fund and will allow investors to recycle their capital”. 

Collins says investor interest in the hotels is strong: “The sale of this portfolio is one of the most anticipated offerings in the Australian hotel investment market for some years. Over the past six months we have been constantly asked by investors when these hotels are coming to market. The time has finally arrived.” 

Collins believes the sale of this portfolio will be of particular appeal to major global investors looking for large-scale acquisitions.