JLL closes largest sale of a single hotel asset in New Zealand history
JLL today announces the sale of the Stamford Plaza Auckland for NZ$170m, the largest ever single hotel asset in New Zealand history to go unconditional.
The Stamford Plaza, which, was originally branded as “The Regent”, was managed and operated by Stamford Hotels & Resorts as part of the Stamford Group for the past 27 years, with great aplomb.
The Stamford Plaza was sold to a consortium comprising the CP Group, the biggest hotel owner in New Zealand with a global portfolio in excess of 50 assets, in association with global investment firm Alvarium Investments via its locally owned Auckland office, and Archipelago Capital.
CP Group believes now is the right time to buy in the New Zealand market following the opening of international borders in the country and stability of the commercial property sector.
Alvarium Investments founder and global co-chair Andrew Williams considers this investment an important strategic decision to add a premium Auckland hotel to Alvarium’s existing real estate assets at an opportune time to capitalise on current market conditions.
“We see New Zealand as a secure real estate market, buoyed by a rebounding hospitality and tourism sector, and well-positioned post the peak of the pandemic,” says Williams. “This co-investment aligns with our long-term approach of working with teams that have a proven high-performing record to drive returns for our clients and our firm through timely investment opportunities.”
“Stamford Plaza is the pride and joy of the Stamford Group and was especially hand-picked by Mr CK Ow, Chairman of the Group, during his strategic acquisitions in the ‘90s throughout Australasia. The Stamford brand has been outstanding in adding value to the quality of 5-Star hotels in New Zealand. In October 2008, the Stamford Group not only upgraded the hotel, but added 149 ultra-high-end luxury apartments, contributing to the change in the city-landscape.” says Thomas Ong, Chief Operating Officer of Stamford Hotels & Resorts.
“The divestment represents a recalibration of the group’s investment strategy, which has made in-roads into other real estate classes within the global marketplace, such as trophy asset properties in the City of London. The group is well-capitalised with no debts and will continue to seek out investment opportunities whenever it can add value. In relinquishing Stamford Plaza, the group is grateful for the long-serving high calibre and loyal hotel professionals remaining within the premises who will continue to be an asset to the incoming operator.”
Nick Thompson, JLL Director Hotels & Hospitality, says finalising a deal of this magnitude proves there is a strong appetite across the New Zealand hotel sector thanks to positivity in the market despite recent turbulence in the economy.
“The hotel market is trending upwards following two years of uncertainty, and that movement is indicative of the strength of the market,” he says.
“Hotel investors tend to take a longer-term approach to asset transactions, so hotels hold up strongly when headwinds impact other real estate sectors,” says Thompson. “The sale of the Stamford Plaza is a record sale for a single hotel asset in New Zealand, pointing to the resilience of the hotels market complemented by continued interest from international investors over the past 30 months.
“For the consortium, purchasing a 5-star hotel in Auckland’s CBD at a time when the market is rebounding represents a fantastic opportunity. Plans to refurbish and rebrand the Stamford Plaza under a major international name are already underway, although branding is still to be decided.”
The last equivalent hotel transaction in New Zealand in excess of NZ$100m was in 2006 when the Rendezvous Hotel, now the Grand Millennium Hotel, sold for NZ$113m via JLL agents. Just over a month ago, Sir Stamford Circular Quay in Sydney sold for AU$210.5m, equivalent to over AU$2m per room. The Stamford Plaza Auckland sale equates to more than NZ$700k per room (across 286 rooms and suites) once planned refurbishments are completed. Two Stamford asset sales in major city centres indicates Australasia is seen as a safe destination to add to portfolios. The divestment of these non-core assets demonstrates the high quality of the wider Stamford portfolio.
“Visitors to New Zealand, particularly tourists, tend to stay longer given the travel time required to access the country,” says Thompson. “This makes hotel assets desirable investments, particularly in Auckland where 70% of international travellers land as the gateway to the rest of the country.”
The central location of the Stamford Plaza in Auckland’s CBD makes it an attractive option for visitors to the city, situated a 4-minute walk from Britomart Train Station, and just 10 minutes from the Te Waihorotiu Station (Aotea) City Rail Link hub currently under construction. Once completed, Karangahape Road and Maungawhau (Mt Eden) will be three- and six-minutes’ travel respectively from the station.
Heading into the final quarter of 2022, the sale of the Stamford Plaza Auckland is one of a number of major hotel transactions expected to be announced before year’s end.
1 NB: The deal will settle late 2022.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $19.4 billion, operations in over 80 countries and a global workforce of more than 102,000 as of June 30, 2022. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.