Christchurch hotels sale total $43m

The 154-room Novotel Christchurch.

The 154-room Novotel Christchurch and 155-room Ibis Christchurch have sold, with on-going management by AccorHotels.

According to the New York Stock Exchange the hotels went to an offshore investment company, which has an existing New Zealand hotel portfolio.

Dean Humphries, Colliers' national director of hotels, who marketed the properties exclusively, says the combined purchase price of about about US$31 million (about $NZ43 million) reflects an attractive yield, given the leasehold tenure of the assets.

"These Christchurch hotels are strategically located in the heart of the CBD and in close proximity to Cathedral Square and the proposed Christchurch Convention Centre, which is to be developed by the New Zealand Government and due to open in 2019."

Humphries says the sale of these assets also marks the end of a 15-month divestment programme by Host Hotels & Resorts, the largest lodging real estate investment trust in the United States, with the Novotel and Ibis Christchurch being the last assets in its New Zealand hotel portfolio to be sold down.

"Colliers was extensively involved with the divestment programme comprising seven Novotel and Ibis branded hotels located in Auckland, Wellington, Christchurch and Queenstown. This portfolio, with a total of 1,158 guest rooms, represented the sale of the largest tranche of hotels completed in New Zealand since the NYSE-listed hotel REIT acquired these assets from Tourism Asset Holdings Limited and AccorHotels in December 2010."

The 155-room Ibis Christchurch, at 107 Hereford St.

Humphries, who was involved in the sale of all seven hotels in the portfolio, says Host Hotels & Resorts decision to individually divest each asset, as opposed to a portfolio sale, paid off handsomely.

"Record prices were achieved for each asset, so the vendor secured a very large premium. The record prices were also a reflection of the current strength of the New Zealand hotel investment market."

Overall, this portfolio was successfully sold down, via five transactions, with a total reported price of about NZ$257 million, reflecting an increase of about 38 per cent on the original reported acquisition price of about $186 million.

"The entire divestment process was hotly contested with significant of international and local interest. The hotels were snapped up by a mix of investors with existing hotel assets in New Zealand, who have witnessed first-hand the rampant growth in the country's tourism sector over the past two years."

In terms of the recent Christchurch sales, Humphries says that with a total of 309 rooms, this combined sale of the Novotel Christchurch and Ibis Christchurch represents the largest single hotel transaction, by room count, completed in New Zealand over the past 18 months.

"This latest sale surpasses last year's sales of the 273-room Novotel Queenstown and the 247-room Novotel and Ibis Auckland Ellerslie.

Host Hotels & Resorts' portfolio of New Zealand hotels included the Novotel Auckland Ellerslie, Ibis Auckland Ellerslie, Novotel Wellington, Ibis Wellington, Novotel Christchurch Cathedral Square, Ibis Christchurch, and Novotel Queenstown Lakeside.