Singapore’s CapitaLand sells Parramatta, North Ryde hotels for $109m
Singaporean real estate giant CapitaLand has sold two Sydney hotels that form part of its $9 billion listed CapitaLand Ascott Trust for $109 million to local investors Frank and Wade Huang as it recycles capital into higher yielding investments.
Highlighting the strong appetite for hotels amid a surge in occupancy levels and room rates over the past 18 months, the trust sold the properties – the 194-room Novotel Sydney Parramatta and the 196-room Courtyard by Marriott North Ryde – at a 5 per cent premium to their October 2023 valuation on a sharp yield of 4.4 per cent.
The buyer of both was the Huangs’ Silversea Investments, which also owns the Holiday Inn Sydney Airport hotel at Mascot, Royal Pacific Hotel at Lane Cove and Mercure Sydney Parramatta.
The deal leaves CapitaLand Ascott Trust with 12 Australian hotels, including the Novotel Sydney Central, the Pullman and Mercure Melbourne Albert Park and several Quest apartment hotels.
Its global portfolio includes 32 hotels in Japan, 16 in France, 11 in the US and four in London.
The trust’s chief executive, Serena Teo, said the sale of the two hotels situated outside the Sydney CBD was part of a “reconstitution strategy” as it focused on assets that offered better yields and would further uplift the value of its portfolio.
“As additional capital will be required to upgrade these two mature properties, the divestment will enable us to redeploy the proceeds into more optimal uses such as but not limited to paying down debt and funding our other asset enhancement initiatives,” she said.
“The exit yield is also at an attractive level that compares favourably against the current cost of borrowing in Australia. We recently divested four mature serviced residences in regional France at an exit yield of about 4 per cent.”
The sale of hotels in Sydney and France will be used to partially finance the trust’s acquisition of three prime lodging assets in London, Dublin and Jakarta at a higher yield of 6.2 per cent.
Despite the trust downsizing its Australian portfolio, Ms Teo said the country remained a key market, and one where its hotels were performing strongly.
The trust’s Australian hotels reported revenue per available room (revPAR, the key industry metric) of $152 over the September quarter, up 18 per cent year-on-year and higher than pre-COVID 2019 revPAR.
“We continue to see strong demand from corporate and leisure guests for our serviced residences and hotels in Australia, boosted by large-scale sporting events,” Ms Teo said.
One of the trust’s flagship Australian properties, the 255-room Novotel Sydney Central, will be refurbished and expanded with eight more floors, adding 72 rooms.
The sale of the Sydney hotels was negotiated by Michael Simpson and Vasso Zographou from CBRE.
”The purchase of the CLAS [CapitaLand Ascott Trust] properties represents astute buying, with Novotel Sydney Parramatta positioned to benefit from the increasing importance of the Parramatta CBD as well as the unprecedented growth currently occurring in Greater Western Sydney,” Mr Simpson said.
“Similarly, the Courtyard by Marriott North Ryde will continue to service the ever-expanding Macquarie Business Park, which provides a decentralised corporate solution to current work trends.”
About $2.5 billion of hotels are expected to change hands by the end of the year, with a further $2 billion being marketed.
Last week, Indonesia’s ultra-wealthy Karim family paid $61.8 million for The Old Clare Hotel in Chippendale on the Sydney city fringe.
