Sovereign Wealth Investor NZ Super Fund is Putting NZ$300m into Hotels

Main Photo: The Four Points by Sheraton Auckland

Date: July 2019

Location: Initially Auckland and Christchurch, New Zealand

Name: The New Zealand Super Fund

No. of Keys: 664

Seller: The hotels were owned by the Russell Group and Lockwood Property Group

Buyer: The New Zealand Super Fund is partnering with the Russell Group and Lockwood Property Group and is looking for further acquisitions. The move will diversify the fund, while also backing the country’s tourism sector, which employs one in seven New Zealanders.

It will start by acquiring the Four Points and Adina in Auckland, and the BreakFree in Christchurch, reports the New Zealand Herald.

The NZ Super Fund is taking the plunge into tourism, investing into a NZ$300 million hotel portfolio which includes two properties in Auckland and one in Christchurch, with the intention of buying others.

The phased investment – which the fund is not putting a specific figure on – includes the Four Points by Sheraton and Adina Auckland Britomart in Auckland, the BreakFree Hotel in Christchurch and comes as the rate of international visitor growth levels off.

The fund, established by the Russell Group and Lockwood Property Group, creates a platform for further investment in New Zealand’s tourism sector.

Under the arrangement, two joint ventures had been created – one to own the properties and the other to manage the properties and identify future opportunities.

Russell Property Group’s latest hotel project is QT Auckland due to open in 2020.

NZ Super Fund’s head of direct investments, Will Goodwin, says the partnership would give the fund exposure to the fast-growing tourism sector, diversify its investment portfolio and help support the industry’s strategic objectives.

“New Zealand needs additional hotel accommodation to support both growing domestic tourism and international arrivals. There are clear capacity constraints in this sector and we look forward to working with our partners to identify opportunities for future growth,” said Goodwin.

Total annual tourism expenditure for the year ending March 2018 was NZ$39.1 billion, an increase of 7.7 per cent ($2.8b) from the previous year. That includes both international and domestic tourism.

Despite this growth, New Zealand is projected to have a significant shortfall in hotel rooms, with more than 4500 extra beds needed by 2025. Auckland faces the biggest constraint, with a requirement of up to 4300 new hotel rooms but only 2500 projected to be built.

Goodwin said the fund invested for the long term and took into account cycles, such as the current drop off in the rate of tourism growth. Established hotel chains had also co-existed with alternative accommodation providers such as Airbnb, he said.

Colliers International’s specialist hotel advisor Dean Humphries played a key role in the introduction of the parties and negotiations. He said the $300m was the indicative value of the current portfolio.

Tourism consultants Horwath HTL have warned of an oversupply of hotel rooms with just over 3000 due to hit the market in 2019 and 2020.

Humphries said he could not comment on Horwath’s report other than to say their numbers were different from Colliers’.

Price: Undisclosed

THPT Comment: Interesting move for these two companies, Russell Group and Lockwood Property Group…and dispute between Horwath HTL and Colliers on the hotel supply needed in NZ.

First Seen: New Zealand Herald

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