Hotel sales could recoup $70m for Sth Canterbury

Auckland's Hyatt Regency could fetch $50 million to $60 million. Photo / Sarah Ivey

Sale prospects for two of South Canterbury Finance's biggest investments look strong and could recoup up to $70 million of taxpayer money.

A global advertising campaign is under way to sell Auckland's Hyatt Regency and Christchurch's Hotel So.

The Hyatt, subject of a $7 million refurbishment, could fetch $50 million to $60 million because some neighbouring Hyatt Residences, the health spa and carpark are also being sold. Hotel So could fetch more than $20 million.

Dean Humphries, national director Jones Lang LaSalle Hotels in Auckland, said calls for initial expressions of interest had drawn parties from Asia, Australia and New Zealand but nothing was decided yet.

"I tell the buyers I'm working on behalf of the New Zealand Government now and our job is to get the best price we can and we're delighted there's been such strong interest. If that wasn't the case, we wouldn't have a competitive tender situation and we'd be in trouble," he said.

The initial expressions are being whittled down to a short-list but no sale would be announced until either later this year or early next year, he said.

"These are big assets, due diligence will be lengthy and the process has to be transparent and robust, it takes time," he said.

Asia is a likely source of buyers, with international groups from there already controlling big brands.

Humphries said one of the largest hotel owners here was NZX-listed CDL Investments, with a market capitalisation of $65 million, part of a larger international Asian-controlled business with a strong appetite for new Australian hotels.

"They bought five hotels in Australia this year and own the Rendezvous in Auckland," Humphries said.

Other potential buyers for New Zealand hotels include: Rydges Hotels and Resorts, part of Amalgamated Holdings of Australia; Eureka of Australia, operated by InterContinental Hotels Group; Singaporean-controlled Hotel Grand Chancellor; Asia's Dynasty Group; and Singapore's Stamford chain.

"There's an appetite for hotels in Australasia generally because of the transparency of our markets, political stability and the Asia Pacific basin is a growing area and a lot of investors are looking," he said.

A number of wealthy New Zealand hotel owners might also be keen on new acquisitions. They include: CP Group, the highly successful Pandy family business which operates from 87 Queen St; French-headquartered Accor Group, which operates many of their properties; Sudima Hotels, controlled by Auckland businessman Sudesh Jhunjhunwala; and Tainui, which has joined with French operator Accor on the new Auckland International Airport Novotel.

Expressions of interest closed last Wednesday for the Hyatt and on September 22 for Hotel So.

Hyatt owes South Canterbury Finance about $42 million, the single largest liability on its loan book.

Hotel So in Cashel St was developed by Canterbury's Dave Henderson.

Henderson borrowed more than $20 million from South Canterbury Finance, a loan secured via a first mortgage. Hotel So is the second-largest hotel in Christchurch (by room inventory) behind the Crowne Plaza.