Partnership allows NZ Super Fund to continue investment in hotel portfolio
The NZ Super Fund has made another investment in local hotels with New Zealand property company partners, buying Holiday Inn Rotorua.
In July last year the sovereign wealth fund, set up to help pay for New Zealand superannuation costs in the future, announced it was coinvesting in a $300 million hotel portfolio established by the Russell Group and Lockwood Property Group, creating a platform for further investment in New Zealand’s tourism sector.
The phased investment by NZ Super Fund included the Four Points by Sheraton and Adina Auckland Britomart in Auckland, the BreakFree Hotel in Christchurch, and an intention to acquire and develop additional sites.
The property companies had been looking to sell the three hotels. The deal was brokered by Dean Humphries, national director hotels, at Colliers International.
NZ Super said just before Christmas the new investment partnership was expanding its portfolio with the acquisition of the 203-room Holiday Inn property in Rotorua.
The Rotorua hotel will be added to the portfolio with settlement of the purchase expected this year. NZ Super declined to reveal the cost of buying the hotel and the total value now of the jointly-owned hotel portfolio.
The direct investment by NZ Super in New Zealand tourism assets is a small part of its overall investments, worth about $47 billion these days.
The Rotorua hotel was first marketed by Colliers in February 2018 but failed to sell and was taken off the market.
Humphries said Russell Group approached the owners after the property had been withdrawn and an ‘‘off-market’’ transaction was done.
The hotel was purchased by the partnership from the Low family who had owned it for more than 20 years.
Russell Group managing director Brett Russell said the Rotorua hotel was an excellent opportunity. Under the partnership, Russell Property Group is responsible for identifying and scoping potential investment opportunities.
The 4.5 star hotel included largescale function and meeting facilities as well as the popular Chapmans Restaurant, heated outdoor pool and spa facilities, gymnasium and parking for more than 120 vehicles.
The hotel was on more than one hectare of land adjoining the Whakarewarewa Mᾱori Village and geothermal park, one of the region’s most popular tourist destinations.
Russell said the hotel had recently undergone extensive renovation, including a range of new plant and seismic upgrades, and refurbishment of many of the guest rooms and front-of-house amenities.
NZ Super Fund’s head of direct investments Will Goodwin said the strategic acquisition in a key provincial tourism hub was in keeping with the fund’s strategic objectives of adding assets in provincial tourism centres to complement its existing portfolio of properties in Auckland and Christchurch.
The strategic acquisition in a key provincial tourism hub was in keeping with the fund’s strategic objectives of adding assets in provincial tourism centres.
‘‘Rotorua is an attractive destination for international and local tourists alike.
‘‘Total hotel guest nights for the year to September stood at more than 965,000, making the Rotorua property a high-value addition to the portfolio.’’
The hotel was managed by international hotel operators IHG under its Holiday Inn brand. IHG would continue to manage the day-to-day operations of the hotel.
It was the first major hotel to be sold in Rotorua since 2011.
Humphries said hotel assets were tightly held. In the two years 2017-18 a total of 19 hotels sold in New Zealand worth about $300 million compared to 29 sales totalling more than $500m in the two years 2015-16.
Last year, there were only eight hotel sales (over $5m) worth about $235m, excluding the sale of Holiday Inn Rotorua that would settle in 2020, he said.