Property developer Golden Age Group and affiliates of Starwood Capital Group, a global private investment firm, have signed an agreement to enter into a joint venture to manage the hotel component of Golden Age’s $600 million mixed-use development, 85 Spring Street, in Melbourne’s CBD.
Golden Age Group purchased the L-shaped site that fronts both Little Collins and Spring Street from Grocon in February 2017 for $75 million.
The company has redesigned the site and re-launched it as a $400 million, 39-level residential development. The project comprises 138 apartments and includes provisions for a $200 million hotel fronting Little Collins.
The proposed 26-storey hotel will offer 250 hotel rooms and high-end amenities including a bar, restaurant, conference rooms and gym, and is currently slated to open in 2020.
[Related reading: Golden Age Announce Launch of 85 Spring Street Tower]Jeff Xu, managing director of Golden Age Group said the developer is well-versed in Melbourne’s hotel market and is confident that this world-class partnership will deliver a premium hotel offering to the Melbourne market.
“Melbourne’s hotel market has shown continued growth in rates with strong, stable occupancy and increasing demand due to Melbourne’s extensive events calendar and growth in international tourism,” Xu said.
“We believe strongly in hotels as a well-performing asset class and in the continued strength of the tourism industry.”
Xu’s first project was a four-storey student apartment block in Melbourne's eastern suburbs in 2006, which he followed up with the Sheraton Hotel in Little Collins Street. Golden Age has also entered the Sydney market with residential developments in The Rocks, Double Bay, Waterloo and Macquarie Park.
The Starwood Capital transaction is subject to regulatory approval.
The premium hotel will be the latest in a long line of projects for Starwood Capital and its affiliates. Since Starwood Capital Group’s inception in 1991, the firm has raised approximately $44 billion of equity capital and currently manages more than $55 billion in assets.
Managing director for Starwood Capital Group in Asia, Kevin Colket, said that the decision to work with Golden Age Group was a combination of market confidence and the enduring reputation of the Jeff Xu's brand.
“Melbourne's hotel market achieves almost 90 per cent occupancy while demand continues to grow,"Colket said.
“With several new competitive hotel offerings planned for the Melbourne hotel market, we believe a hotel in this tremendous location with many park view rooms and adjacent to the vibrant city’s best retail, restaurants, and leisure offerings should perform very well."
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Golden Age Group’s investment portfolio equates to a combined value of $4.2 billion with projects spanning the Eastern seaboard. The developer recently reported settlement success on stage one of Melbourne’s tallest residential building, Victoria One.
85 Spring Street will commence construction mid 2018 with completion expected towards the end of 2020.