Novotel St Kilda snapped up by Greg Shand's Barana Group

Sydney developer the Barana Group has bought The Novotel Melbourne St Kilda for around $55 million following an international marketing campaign to sell the 211-room hotel.

The sale price reflects a yield of about 8%.

The hotel was put up for sale by Tourism Asset Holdings Limited in June and was marketed by CBRE Hotels’ Wayne Bunz and Mark Wizel.

Bunz told Property Observer in June that he was expecting it to sell for between $55 million and $60 million.

The Barana Group, led by chief executive Greg Shand, has added the hotel to its growing hospitality portfolio, which also includes Novotel in Melbourne at Glen Waverley.

“We’re investors in the hospitality space. That being said, we are primarily property investors, not necessarily just hotel investors,” Shand told the Australian Financial Review.

The Novotel Melbourne St Kilda is operated by Accor, the world’s biggest hotel and tourism group, and has a management agreement which still has nine years to run.

After that, vacant possession of the hotel will be available, “offering a myriad of future redevelopment options,” said CBRE in its marketing campaign.

Shand said the hotel was expected to be run as a passive hospitality investment for the term of the management agreement with Accor.

“Things may change, but if the hotel performs well, that’s what we’ll be doing.”

Wizel says the hotel was viewed by investors as an “attractive land banking opportunity”.

The Novotel St Kilda last sold in 2008 and before that changed hands for $21 million in 1992 in the aftermath of the early 1990s recession.

The recently refurbished hotel includes 211 rooms over six levels on a 5,791-square-metre site boasting 270-degree views of Port Phillip Bay.

The hotel is zoned residential 1 under the City of Port Phillip.

The hotel originally opened in 1991 as the St Moritz hotel, which became the Novotel Bayside in 1993 when Accor acquired the management rights and then Novotel St Kilda in 1999.

It was originally developed by Michael Lasky and Izzy Hertzog.

The hotel stands on the site of the St Moritz ice rink, which operated from 1939 to 1981, attracting more than 2000 people to its 1,850 square metres of ice.

The ice rink was destroyed by a fire in 1984.

The first building on the site was the Wattle Path Dance Saloon and Café, which opened in 1923.