Malaysian REIT pays $415 million for Marriott five-star hotel portfolio

The sale of Australian CBD hotels to offshore interests continues, with a Malaysian investment trust paying $415 million for a portfolio of three five-star Marriott hotels.

The Sydney Harbour Marriott, the Brisbane Marriott and the Melbourne Marriott have been bought by Malaysia-listed Starhill Real Estate Investment Trust, managed by Malaysian conglomerate YTL Corp.

Asian buyers have accounted for 93% of all hotel sales this year.

The Marriott properties formed part of Colonial First State’s (CFS) Commonwealth Property Hotel Fund, which is being wound-up.

The sale was negotiated by Mark Durran and Craig Collins of Jones Lang LaSalle Hotels, who says the federal government’s changes to withholding tax on management investment trusts “caused some friction” but did not prevent the deal from going ahead.

The three hotels were acquired by CFS between June 2000 and April 2001.

The jewel in the crown is the 550-room Sydney Harbour Marriott at the northern end of Pitt Street, which was constructed in 1989 and underwent a $35.5 million refurbishment during the 2002-2003 financial year.

The Brisbane Marriott is a 267-room hotel constructed in 1998, and the Melbourne Marriott is a 185-room hotel constructed in 1982. It underwent an $8 million refurbishment in 2002.

Prior to the acquisitions Starhill had a market capitalisation of around RM1,025 million ($324 million as of June 2010) comprising  the JW Marriott Hotel Kuala Lumpur and 60 units of serviced apartments, four levels of commercial podium and two levels of car parks located within The Residences at The Ritz-Carlton, Kuala Lumpur.

The Australian acquisitions will bring its portfolio to around $1 billion.

The five-star hotel sale attracted significant interest from offshore investors and takes total hotel sales to $614 million for the first six months of the year, with  Jones Lang LaSalle estimating that this could double by the end of the year.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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