Mirvac and NRMA will offload one of the largest hotel portfolios offered to market in Australia, with hopes it could realise more than $550 million, as the sector claws its way to recovery from an international tourism ban and state border closures.
Mirvac and NRMA each hold a 50 per cent interest in the Tucker Box Hotel group, which invests in hotels across Australia as investment properties. The portfolio comprises 2,032 rooms across 11 Travelodge Hotels.
The portfolio spans eight hotels in Sydney, one in Brisbane, one in Melbourne’s Southbank and one in Perth.
In May last year, Mirvac had hoped to sell its half share from the Tucker Box Hotel group, which at the time was estimated to be worth around the $600 million mark.
In its group report, Mirvac said the pandemic had a severe impact on occupancy of the hotels of the joint venture and accordingly its profit throughout the pandemic.
Marketing materials show that 81 per cent of rooms are located in Sydney and Melbourne, and half of the portfolio by income is Sydney CBD-based.
Offered to market by international expressions of interest, McVay Real Estate and Credit Suisse are exclusively managing the campaign which runs to 19 November.
The offering also includes ownership of the Travelodge Hotels brand in Australia and New Zealand.
All properties are currently leased by Value Lodging Pty Limited, a subsidiary of Toga Far East Hotels and also have the option for vacant possession upon sale.
The hotel, tourism and accommodation sector has been severely impacted by the pandemic, and consequently the valuations of the hotel investment properties.
While a price expectation was not confirmed, Mirvac group’s annual report shows that as of 30 June 2020 the portfolio was independently valued by expert hotel valuers at $520 million, this figure down from $583 million in 2019.
Room occupancy and average room rates have been directly impacted as a result of the decline in room night demand, Mirvac’s annual report said that assumptions surrounding normalised levels extended to around 3-4 years’ time.
The Tucker Box joint venture was in compliance with all borrowing covenants as of the end of June 2020.
“However, based on estimates made at 30 June 2020, it is considered likely that due to the impact of Covid-19, the Tucker Box Hotel Group will breach a lending covenant within the next 12 months,” the group notes.
The group says that the potential breach does not impact any of its banking covenants and the joint venture is in discussion with its lenders.
The unit-holders of the joint venture have provided the Tucker Box Hotel Group with a letter of support of up to $1.5 million each, up to the end of September 2021.
In 2018, the joint venture offloaded the 74-room Travelodge in Rockhampton for around the $7 million mark.