Mercure Hotel, D*Lux Budget Hotel and Diamant Hotel listed for sale in Kings Cross

Mercure Hotel, D*Lux Budget Hotel and Diamant Hotel listed for sale in Kings Cross
Mercure Hotel, D*Lux Budget Hotel and Diamant Hotel listed for sale in Kings Cross

Three hotels straddling the glittering lights of Kings Cross have been listed for sale - the Mercure Hotel, the D*Lux and the Diamant Hotel.

Property Group Australand will again try to sell its $70 million Mercure Hotel, formerly known as the Crest Hotel (pictured below), near Kings Cross station.

The group has enlisted Jones Lang LaSalle Hotels agents Mark Durran and John Musca to sell the hotel, which includes gaming pub on the ground floor.

The building is being offered in one line or as different stratas.

The decision to sell the trophy property “in the not too distant future” was raised in Australand's July results, with the group saying the hotel was not core to its portfolio, though it was performing well.

The Crest Hotel comes with some interesting associations, including links to the recent the death of Michael McGurk.

In 2007, Australand bought the hotel for $63 million from Coogee Bay Hotel owner Chris Cheung. Cheung had bought the hotel from developers Allen Linz and Eduard Litver. After closing the sale, Australand announced plans to convert the building into a series of apartments, waiting for the market to improve.

Australand never saw those plans through, but in 2009 the group came close to selling the building for $72 million to developer Michael Sanchez, whose Benchmark Group planned to do the conversion.

Sanchez narrowly pipped the cash-strapped Michael McGurk, who desperately tried to negotiate a deal to have the syndicate he represented buy the property for $70 million. He died shortly afterwards.

Both deals eventually fell through but the conversion plans were never scrapped, with Australand coming close to developing the building 2010.

Way back in 1992, a Korean developer bought the hotel for $23.8 million.

 


 

Meanwhile the nearby D*Lux Budget Hotel (pictured below next to the Empire building) has been listed for sale also by Jones Lang LaSalle.

Currently run as a budget hotel with beds starting from $22 a night, it is being offered as vacant possession.

At 30 Darlinghurst Road, the building is a near entreprenuer David Kingston’s significant holdings.

The hotel is currently owned by veteran Sydney property investor Millie Phillips through her company Rebenta Pty Ltd.

Phillips, a former nickel mining spruiker, owns a number of hotels and retirement homes throughout Sydney.

In 2010, Phillips started trying to find a new tenant for the property.

The property was unsuccessfully listed last year for $14 million.

Current listing agent Peter Harper declined to give a price for the property, saying it’s an expressions of interest campaign and they’ll hear from the market before they list a price.

It’s in its second week of marketing this time around, with Harper saying there has been inquires from 40 to 50 potential buyers.

He says it’s been a mixed group of potential buyers including developers, possible owner-operators, and people looking at converting.

It currently earns just under $700,000 per year.

The seven-storey building includes 60 ensuited rooms with approximately 300 beds in a dorm arrangement. It has a TV room, two lounge rooms with bathrooms, a computer room, a large kitchen and two storage rooms.

It also has two retail tenancies at 226 square metres.

 


 

And the Diamant Hotel (pictured below), on the eastern side of Darlinghurst Road, has been listed through Jones Lang LaSalle.

The four-star boutique hotel on Kings Cross Road comes with 76 guest rooms and three retail lots.

The hotel, run by 8Hotels, is being sold by by owner Arena Funds Management.

The building was originally constructed in the 1970s and was then operated as the Hyatt Kingsgate. It then became the Millennium Hotel and underwent renovation in 2007. The strata-titled building consists of the Diamant Hotel, three retail lots, 49 commercial office suites and a penthouse apartment. Arena Funds Management own just three of the stratas amounting to 4,583 square metres, all of which are offered for sale.

Its hotel runs from levels two through six while the three retail lots are on the lower ground, ground and mezzanine floors.

The three retail stratas are leased by Ginseng Baths, Hillery Group's wine bar Time to Vino, and Latitude Fitness.

The main lease is due to expire in 2019.

The group has $51 million in investment properties.

The operator recently unveiled three new apartments in the hotel, which were converted from office space on the hotel's 11th floor, with prices reportedly starting from $500 a night.

And speaking about leisure properties, two nearby brothels have been listed for sale.

Studio 52, on Kellett Street has been listed for sale at $2 million plus.

The 10-room brothel is licensed as a 24-hour, seven-day-a-week sex parlour.

And just next door, at 48 Kellett Street, Moods of Sydney brothel has been listed for sale as well.

Alistair Walsh

Alistair Walsh

Deutsche Welle online reporter

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