SBG Hotel Company Ltd and SBG Hotel Company Trust (SBG Hotel Group) today completed the acquisition of the IHG Hotel portfolio from Eureka Funds Management. SBG Hotel Group is now the largest owner of IHG operated hotels in Australia, employing more than 800 staff. The portfolio includes the Intercontinental Melbourne, Crowne Plaza Melbourne, Crowne Plaza Coogee, Crowne Plaza Canberra and Holiday Inn Potts Point.
SBG Hotel Group is a sister company of Atlas Capital Group, a leading funds management company in Australia. Supporting Atlas Capital Group as investors in the transaction were institutions and both local and offshore HNWIs.
Managing Director of the SBG Hotel Group and Atlas Capital Group, Mr. Paul Salter, said in announcing the transaction, “We were delighted to be able to secure such a great portfolio, especially given the increasing global competition for these type of assets and the strong macro tailwinds for the sector”.
The strength of the underlying assets also ensured strong debt capital support, with Mr. Salter commenting “We were extremely pleased with the interest and support we received from both domestic banks as well as one of China’s largest banks”.
“This transaction provides both our local and offshore investors access to high quality east coast CBD and metropolitan hotel assets that provide both a strong cash yield together with potential capital growth”, said Mr. Michael Gu, Executive Director of Atlas Capital Group.
Right sector … right time
SBG Hotel Group believes the timing of the acquisition will prove fortuitous as there are expected to be strong macro tailwinds supporting the hotel sector over the next three to five years:
- Constrained supply: CBD hotels are trading at amongst the highest occupancy rates in the world but are still valued at well below replacement cost, implying future supply will remain limited;
- Increasing demand:
- a subdued Australian dollar should see increasing demand for Australia as an international tourist destination as well as encouraging more local travel by Australian residents; and
- increasing international tourism, especially from mainland China, which according to the ABS, now delivers more than 1 in 8 visitors.
These factors all support an upwards trajectory in occupancy rates and average daily room rates.
A platform for growth
SBG Hotel Company Ltd has assembled a strong board to manage the business and seek out growth opportunities:
- Don Clarke – Chairman, former senior partner at Minter Ellison, Non-Executive Director (and Deputy Chairman) of Webjet Limited and Non-Executive director of Contango Income Generator Limited
- Paul Salter – Managing Director.
- Matt Eady – Director, former CEO of Tourism Asset Holdings Limited which was the largest hotel owner in Australia and was successfully sold to the Abu Dhabi Investment Authority
- Lorenz Grollo – Director, Managing Director of Equiset and Grollo Group
“Our strategy is to build a $1 billion plus hotel group in Australia. This portfolio provides a tremendous base to execute on this strategy, with future growth coming from either acquisition or development of 3 to 5 star hotels located predominantly along the eastern seaboard and select regional areas,” said Mr Don Clarke, Chairman of the SBG Hotel Company Ltd. Amongst its future options, SBG Hotel Group may consider an ASX listing.
Advising SBG Hotel Group were MAP Capital as corporate and debt adviser and Minter Ellison as legal adviser.
For further information contact:
SBG Hotel Company Limited & Atlas Capital Group
M: + 61 (4) 1450 8994