Hotels are hot in new Colliers Portfolio
Aerial view of the Kingsgate Hotel Whangarei.
Tourist hotels feature prominently in Colliers International’s fourth 2015 commercial property portfolio which was launched on the market yesterday.
Jeremy Graham, the agency’s marketing director, says the 62 page publication entitled Colliers Portfolio - Leaders in our Field features 46 quality listings and covers a wide range of hospitality, industrial, office and retail properties.
“The geographical spread of the listings covers the country from a new Noel Leeming and Warehouse retail store up north in Kaitaia, all the way down to a coastal headland in Stewart Island,” Graham says.
Highlight hospitality properties are the Kingsgate Hotel Whangarei at 9 Riverside Drive, Riverside, Whangarei; the Kingsgate Hotel Hamilton at 100 Garnett Avenue, Te Rapa, Hamilton; and the Travelodge Wellington at 2-6 Gilmer Terrace in the Wellington CBD.
The two Kingsgate hotels are being marketed for sale, individually or together, by Dean Humphries, national director of hotels for Colliers International, who is selling them by way of expressions of interest closing at 4 pm on Tuesday October 6, 2015.
Humphries says the hotels represent an exceptional opportunity to acquire significant real estate assets in two of New Zealand’s largest and fastest growing regions.
“Assets of this nature are rarely sold on the market and, due to the value of the underlying land and high building costs, they are unlikely to ever be replaced in their current format. They will provide investors with very attractive returns over the medium to long term.”
Humphries says, as an added appeal, new owners have the option to retain the existing hotel company to manage the properties on their behalf or buy them with vacant possession.
“Both hotels are currently being managed by the prominent hotel operator Millennium & Copthorne Hotels under its popular three to 3.5 star Kingsgate brand.
“A new investor could choose to retain this group to manage the hotels or appoint a new hotel company under a different brand. Alternatively both hotels could be purchased by an owner operator, or family business, that elects to operate the hotels themselves.”
The Whangarei Kingsgate was constructed in 1986 and the Hamilton Kingsgate in 1998. “Both properties have been owned by the same family since they were built and the owners are now selling them as part of a wider divestment strategy,” Humphries says.
The Kingsgate Hotel Whangarei is close to the Whangarei CBD and overlooks the town basin and marina. It comprises 115 guest rooms and includes a large conference, banquet facility and restaurant with 24 hour reception service. It is the largest accommodation provider in New Zealand’s northernmost city just a two hour drive from Auckland.
The Kingsgate Hotel Hamilton.
The Kingsgate Hotel Hamilton has 147 guest rooms along with city’s biggest conferencing facility that has a capacity to host 600 people. The Kingsgate is the second largest accommodation provider in Hamilton, which is New Zealand’s fourth biggest city, and is located on a large, two hectare parcel of freehold land in the new Hamilton business hub of Te Rapa just 90 minutes’ drive from Auckland International Airport.
Down in the capital, the four star Travelodge Hotel Wellington is being jointly marketed for sale by Colliers International and Savills on behalf of the Toga Group via an international expression of interest campaign closing on Wednesday, September 23.
Dean Humphries says the hotel is subject to a new 15 year management agreement to international operator TFE Hotels (Toga Far East Hotels) under the Travelodge brand.
Located in the heart of the Wellington central business district, the hotel complex encompasses 132 modern guest rooms, a restaurant and five conference and meeting rooms. The property underwent an $11 million refit in 2009 when it was rebranded as the Travelodge Hotel Wellington.
“We expect it to attract strong investor interest, both locally and offshore,” Humphries says. “It is an exceptionally well-appointed property requiring no immediate capital expenditure and having good growth potential in an improving market.”
He says the Wellington hotel will provide investors a prime yielding investment in one of the country’s most tightly held markets.
Michael Simpson, managing director for Savills Hotels Australia and New Zealand, says the Wellington hotel sector is one of the most stable markets in the country with strong government and institutional revenue throughout the week that provides for strong long term sustainable growth.
“Travelodge Hotel has an excellent profile to all the key demand generators that Wellington has to offer, adding to its appeal,” Simpson says.
The hotel building has a seismic rating of 100 per cent of New Building Standard (NBS) and was formerly part of the Plimmer Complex which included a 14,595 sq m office tower and car park facility.
The components of the Plimmer Complex were subdivided into three separate freehold strata-titled assets and the hotel represents the final offering following the recent sale of the office tower and carpark.
“There has never been a better time to own a hotel in New Zealand with tourism demand running at record levels,” says Humphries. “Annual international visitors have reached almost three million people and are up 7 per cent. Occupancy in our major tourism markets is surging to over 77 per cent and room rates across the country increased by five per cent in the last year.
“In return, the record occupancies and increasing room rates are driving overall higher profitability and property values for hotels.”
Humphries says the hotel sector looks set to be one of the strongest key growth sectors of the New Zealand economy over the short to medium term.
“The falling New Zealand dollar is also anticipated to attract even more tourists to our shores in the next 12 months and with a virtual hiatus of new hotel properties coming on the market, further pent up demand for existing hotel inventory is expected.”
Humphries says that growth in the tourism sector is not limited to the largest cities and well-trodden traditional tourism routes.
“We are also seeing increasing demand in many provincial cities such as Whangarei and Hamilton - both satellite cities of Auckland which serves as the international gateway to New Zealand.”
Simpson says China now constitutes New Zealand’s second largest visitor market with arrivals up 30 per cent year on year.
“Coupled with the Chinese government encouraging outbound investment, higher levels of inquiries are to be expected from China,” he says.
The Travelodge Wellington Hotel in the Wellington CBD.
Dean Humphries, (left) & Jeremy Graham, (right) of Colliers.