Asian investors back $104m hotel raising

Larry Schlesinger

Hotel-focused fund manager Salter Brothers has secured $104 million in fresh equity to partly fund its acquisition of the NEXT Hotel in Brisbane.

The group, led by Brothers Paul and Robert Salter, struck a deal in May to buy the 304-room hotel from Challenger for $150 million. Around 60 per cent of the fresh injection of capital came from Asian-based investors with the raising oversubscribed.

Further capital raisings are planned as the group turns its focus to developing new hotels, including in Melbourne and Canberra, with an eye on potentially floating a $1 billion hotel trust.

“We’ve got a few assets we first want to build and open, and then, if the market conditions are right, we’ll look at doing an IPO,” managing director Paul Salter told The Australian Financial Review in May.

The group made its presence known in December 2015, when it acquired a portfolio of five IHG hotels from Australia Post Super for $500 million.

Its Australian hotel portfolio comprises Crowne Plazas in Melbourne, Coogee and Canberra, the Intercontinental Rialto on Collins Street, a Holiday Inn in Potts Point and voco Gold Coast.

Hotel developments in the works include a new hotel planned at 474 Flinders Lane, a site the Salter brothers bought for $22.8 million in 2007, and a Holiday Inn Express in Canberra.

The most recent acquisition, the NEXT Hotel, is Salter Brothers’ first in Brisbane.

The hotel, operated by Singapore’s next Story Group, opened in 2014 following a $50 million refurbishment of the former Chifley at Lennons hotel. It includes two levels of retail on Queen Street Mall.

Commenting on the latest capital raising, Paul Salter said: “We would like to thank both our existing investors who continue to show faith in our long-term strategy and also a number of new investors that have joined our register.”

Niall McCarthy, director of funds management at Salter Brothers, said: “The significant interest in the Salter Brothers Hotel Group from both sophisticated high net worth investors and institutional investors is testament to the quality of the portfolio, the team and outgoing opportunity that has been developed over the last four years.”