Salter Boost Portfolio with $150m Hotel Buy


Melbourne-based Salter Brothers has purchased the Next Hotel on Brisbane's Queen Street Mall from financial services company Challenger for $150 million.

The purchase of Next Brisbane will take their hotel portfolio to more than 2,400 rooms, with seven hotels across the country including three Crowne Plaza hotels in Melbourne, Coogee and Canberra.

Formerly known as Lennons Hotel Brisbane, the 304-room, 4.5 star hotel operated by Singapore’s Next Story Group opened in 2014 following a $50 million refurbishment by SilverNeedle Hospitality.

The property previously changed hands in 2015 when Sydney-based investment management company Challenger paid $133 million for the then rebranded asset.

The hotel, which offers almost 2,000sq m of prime retail space part of which is leased to Westpac Banking Corporation, fronts Brisbane’s Queen Street Mall, one of the strongest retail strips in the country.

Paul and Robert Salter, who originally set up their SB&G Hotel Group investment platform in 2014 in partnership with Michael Gu’s advisory firm iProsperity, will now boost their hotel empire to approximately $1 billion.

Related: Little Projects’ CBD Hotel Moves Ahead

Buying the Next Brisbane will take Salter Brothers hotel portfolio to more than 2,400 rooms, with seven hotels across Sydney, Melbourne, Canberra, Brisbane and the Gold Coast.
Buying the Next Brisbane will take Salter Brothers hotel portfolio to more than 2,400 rooms, with seven hotels across Sydney, Melbourne, Canberra, Brisbane and the Gold Coast.

“The transaction represents a strong opportunity for us to enter the Brisbane market at this point in the cycle, as we expect the market to continue to recover in the coming years as new supply is absorbed,” Robert Salter said.

“This property will provide Salter Brothers Hotel Group with long-term exposure to the improving Brisbane hotel market, underpinned by secure leases to high quality tenants, delivering an attractive initial yield and ongoing steady cashflows.”

The off-market deal was brokered by JLL’s Tom Gibson and Simon Rooney and boosted the Salter Brothers hotel empire to about $1 billion.

JLL head of retail investments Simon Rooney said mixed-use CBD retail assets in prime locations were tightly held and in demand, as shown by two recent deals, Dexus buying a half stake in the MLC Centre in Sydney for $800 million and then 80 Collins Street in Melbourne for $1.48 billion.

Accompanying its Brisbane acquisition, Salter Brothers has also tapped investment banks UBS and Credit Suisse to raise up to $250m in two tranches ahead of a potential float to fund its development of two hotels in Canberra and Melbourne.

Hotel market remains red hot

In recent months the Australian hotel market has moved from strength-to-strength thanks to a tourism revival, historically high occupancy rates and a record development pipeline.

JLL vice president of hotels and hospitality Tom Gibson said the total number of room nights sold in Brisbane for year-to-date through to April 2019 had increased by 3.5 per cent, showing the market’s resilience through the addition of new supply.

“With Sydney and Melbourne hotel markets becoming increasingly difficult to enter, we are receiving record interest for other core markets that feature attractive short- to medium-term market fundamentals, as evidenced by the recent liquidity seen in Brisbane and Perth.”

Brisbane is currently in the midst of a market repositioning, with over $12 billion worth of private and public infrastructure projects including a second runway, new cruise terminal and underground railway projects.

The Next hotel is primed for growth as it sits near the forthcoming $3.6 billion Queens Wharf Casino, the $2 billion Brisbane Live entertainment precinct above Roma Street Station and recently opened $200 million Howard Smith Wharves project.

A number of luxury hotels have opened in Brisbane recently including the W Brisbane, Westin Brisbane, Calile James Street and Emporium South Bank, establishing Brisbane as a major global gateway city.

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