The only major post-Covid New Zealand hotel sale is under way, as a big Queenstown property changes hands for about $60 million to a group of buyers including a $48 billion Crown entity.
In a time where tourism and the hospitality sector are being hammered by border closures and the pandemic, tripartite entity New Zealand Hotel Holdings Assets is buying one of the southern Mecca's biggest hotels.
Brett Russell's Russell Property Group, the Crown's NZ Super Fund and Lockwood Property Group have exchanged contracts with a group of about 50 private investor owners to buy the five-star 98-room Sofitel Queenstown.
Dean Humphries, Colliers International hotel director for New Zealand, is the agent. Contracts have been exchanged, the sale is unconditional and settlement is due next year, he said today.
"It's the only major hotel sale since the event of Covid earlier this year. It's also the first significant sale in Queenstown since the Novotel sold in 2016. There hasn't been anything of any significance in the last five years in Queenstown," he said.
Up to about 50 people owned rooms but hotel and retirement specialist Graham Wilkinson headed the deal to re-amalgamate titles for the sale to one entity.
Humphries paid tribute to Wilkinson who he said had brought a large number of individual owners together.
The hotel has offices and shops in its two lower levels. Wilkinson sold around 26 titles in the building, including commercial units.
"With our borders closed, if we don't have sales like this, it's hard to sell to offshore entities because they can't get into New Zealand to look at the properties. So having a buyer like this which is reinvesting into the local community is really important," Humphries said.
Last year, New Zealand Hotel Holdings Assets bought the 255-room Four Points by Sheraton Auckland, the 168-room Adina Apartment Hotel Auckland and the 263-room BreakFree on Cashel in Christchurch.
Then earlier this year, the same venture bought Rotorua's Holiday Inn and now the Queenstown property.
"They're building up a high-quality hotel portfolio with good geographical distribution across New Zealand. That's their focus," Humphries said.
Wilkinson said today Sofitel owners were mainly Australian and New Zealanders and some people based in Asia.
"I organised collectivisation of all units," he said.
Brett Russell said the Sofitel Queenstown was a quality asset and strategic addition to the partnership's portfolio.
"The hotel is one of the country's best-performing assets and provides exposure to one of New Zealand's premier tourist destinations," he said.
It was developed in 2005 and sold as a multi-title project to a range of New Zealand and overseas investors. It comprises 98 hotel and retail/commercial units located on a strategic parcel of leasehold land in the heart of the Queenstown town centre.
Wilkinson said the original investors were pleased with the outcome but the buyers had the capital and ability to upgrade the property.
Accor Asia Pacific will continue to operate the hotel.
Will Goodwin, the super fund's head of direct investments, said the Queenstown purchase was a great addition.
"One of the fund's strategic objectives is to add assets in provincial tourism centres to complement its existing portfolio of properties, in gateway cities like Auckland and Christchurch.
"We demonstrated that with the Rotorua acquisition at the start of the year and it's great to be closing 2020 with another major purchase," Goodwin said.
The building is estimated to have a replacement value of about $80m.