Mantra Group buys Art Series hotel chain from Deague family for $52.5 million

Leading listed hotel operator Mantra Group has bought the Deague family's Art Series hotel portfolio for $52.5 million.

The Art Series Hotel Group comprises a portfolio of seven luxury 4 – 5 Star unique hotels in Australian capital cities with more than 1,000 hotel suites, Mantra Group said in an ASX announcement.

Each hotel is inspired by a well-known Australian artist and includes Melbourne's well known suburban hotels such as The Cullen in Prahran and The Olson in South Yarra (pictured above). 

It said the deal would funded via available cash and existing debt facilities. 

“Recognising the strength of the Art Series brand in market, each property will continue to operate under The Art Series brand,” said the announcement.

The recent transaction marks the biggest acquisition by the Mantra Group since its purchase of the 1086-room Ala Moana Hotel in Honolulu for $71 million in 2016, added The Australian Finance Review.

The deal is expected to ease the pressure on the hotel and resort operator, after its stock was downgraded by Citi Research last week, in part due to a lack of major acquisition announcements.

The hotels are expected to contribute about $7 million in underlying EBITDA in its first full year of ownership, the group said.

Settlement of the Art Series Acquisition is expected to occur in late 2017.

“This acquisition enhances our existing portfolio and we have arrangements in place that should deliver new Art Series properties into the future” Mantra Group’s CEO Bob East said.

Mantra shares ended Monday up 5.5 per cent at $2.86.

Deague Group chief executive Will Deague said the family was selling its Art Series Hotels "with mixed emotions", but that it was time to recycle the funds into other areas including multi-unit residential, office complexes and further hotel development.

Earlier this year, the Melbourne-based Deague Group had rebranded itself from Asian Pacific Group. 

Trudy Crooks and Tim Crooks from Resort Brokers Australia negotiated the Art Series deal on behalf Deague Group.