The five-star Sofitel Queenstown Hotel and Spa is set to change hands in what will be New Zealand’s most significant hotel transaction of 2020.
The deal follows the sale of the 65-room Discovery Lodge in Queenstown, announced last month. Both transactions were brokered by Dean Humphries, National Director of Colliers International’s Hotels team. The Sofitel will be purchased by the Russell Property Group (RPG) to form part of their hotel portfolio in partnership with the New Zealand Super Fund and Lockwood Property Group under the entity New Zealand Hotel Holdings Asset LP (NZHHALP).
Humphries said the sale, in the vicinity of $60 million, demonstrates ongoing demand for prime strategic accommodation assets.
"While 2020 has been a year of many challenges for the tourism and hotel industries, we’re continuing to see robust interest from a wide range of investors across our key tourism regions. Most hotel investors have long-term investment objectives in the knowledge there are always cycles in the market."
As a strategic asset in one of New Zealand’s top tourism destinations, the Sofitel Queenstown is a compelling investment that is well-positioned to deliver strong returns in the medium to long term.
The luxury hotel was originally developed in 2005 and sold down as a multi-title development to a range of New Zealand and overseas investors.
It comprises 82 hotel rooms together with a range of retail/commercial units located on a strategic parcel of leasehold land in the heart of the Queenstown town centre. In 2010, local businessman Graham Wilkinson secured a controlling stake in the property and since then has been working on a consolidation model for the property.
In Q1 2020, the opportunity arose to introduce the hotel to Russell Property Group, which has now led to the unconditional sale of the hotel to NZHHALP. On behalf of the vendors, Wilkinson said that the original investors in the asset were pleased with the outcome.
While the hotel had performed well, it was the right time for a new investor to take the asset forward.
Managing Director of Russell Property Group, Brett Russell, said that the Sofitel Queenstown is a quality asset that is a 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," said Russell.
Russell said that the acquisition fits with the partnership’s strategy of building a portfolio of quality hotels throughout New Zealand, reflecting the partnership’s confidence in the long-term future of the industry despite the short-term difficulties arising from the global COVID-19 pandemic.
"We have full confidence this asset will continue to be a market leader over the long term and with our expertise, we hope to add further value to the asset over coming years,” said Russell.
Accor Asia Pacific, one of the worlds’ largest hotel management companies, will continue to operate the hotel and all staff and operations remain the same.
"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 off 2020 with another major purchase in the visitor hotspot of Queenstown," explained Will Goodwin, NZ Super Fund's Head of Direct Investments.
The Sofitel Queenstown Hotel and Spa, which will settle in early 2021, brings the number of hotels in the NZHHALP portfolio to five, joining the Four Points by Sheraton Auckland, Adina Auckland Britomart, Holiday Inn Rotorua and the BreakFree Hotel in Christchurch.