Starwood Hotels and Resorts has ended months of speculation by placing the five-star Sheraton on the Park in Sydney on the market for sale.
According to agents JLL’s Hotels and Hospitality Group, Starwood will enter into a long-term management agreement with the buyer.
If the property does fetch its expected AUD$450 million price tag, it would be one of the most significant purchases in Australian hotel industry history.
JLL’s Hotels and Hospitality Group Australasia CEO, Craig Collins, said the time was right to sell.
“Sydney’s five-star sector is currently experiencing the best trading conditions in many years with Revenue Per Available Room (RevPAR) growth of over 14% for the first three months of 2014, compared to the same period last year,” he said.
“With Sydney experiencing significant office building construction and infrastructure related investment, we expect the hotel sector to continue to experience strong trading conditions over the near and medium terms, accelerated by a benign hotel supply outlook.”
Collins said the Sydney hotel market continues to be a focus of investors globally with international investors having made significant in-roads to Australian hotel real estate over the past five years.
He noted international groups now account for 53% of rooms owned by the 30 largest accommodation owners in Australia (by rooms). Offshore investors predominantly hail from Asia, in particular Singapore, albeit with an increasing proportion of rooms held by Middle Eastern and global groups.
“We are anticipating very strong investor interest in this asset, particularly because of its trophy status, freehold title and exceptional trading profile,” he said.
“It’s important to note that a number of other five-star hotels have sold in Sydney over the past two years and are now in the hands of traditionally long term holders… this may be the last chance for a considerable time for investors to acquire a prime Sydney hotel,” Collins said.
Over the weekend, Frasers Centrepoint finalised a deal to purchase the Sofitel Sydney Wentworth for $202 million, the latest in a spate of sales that last year included the Sydney Harbour Marriott and Shangri-La Hotel Sydney.