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Private equity giant Kohlberg Kravis Roberts (KKR) has snapped up the Sofitel Sydney Wentworth hotel, the favoured haunt for the Liberal Party on election nights, for $315 million at a time when the beleaguered tourism sector is set for a revival.
It was sold by the Singapore-based Frasers Hospitality Trust (FHT) which had been looking for a buyer last year but took it off the market after receiving what it said were low offer prices.
Operated by Accor Hotels, the well-known five-star heritage-listed hotel sits in the heart of Sydney’s financial district and has been used for the past year as a quarantine hotel. There are 436 guest rooms and suites over a gross floor area of 33,589 square metres spread over 17 floors.
Sydney’s first ever five-star hotel: the Sofitel Wentworth has been sold for $315 million.Credit:Brook Mitchell
During the pandemic, occupancy rates at hotels slumped to under 10 per cent and many smaller operators were forced to close. However, with restrictions easing and a high vaccination rate, the sector is preparing for a resurgence in demand.
The off-market sale advised by CBRE was at a 12.1 per cent premium to the independent valuation of $281.0 million as at September 30 on a freehold basis.
In a release to the Singapore Stock Exchange, late on Friday Eu Chin Fen, chief executive of FHT Trust, said the divestment was in line with its active portfolio management strategy to periodically evaluate divestment opportunities to recycle capital for better returns.
She said despite the ongoing COVID-19 pandemic, FHT had achieved an attractive sale price for the asset. “Our title restructuring has enabled the unlocking of a value greater than if Sofitel Sydney Wentworth had been sold as a leasehold property,” she said.
“By doing so, we are unlocking the underlying value of Sofitel Sydney Wentworth at an optimal stage of the property’s life cycle and enhancing returns for our stapled security holders.”
She said Sydney was expected to be facing a significant increase in room supply, particularly in the upscale and luxury segments which will be direct competition for the property just as the market is gradually recovering from the COVID-19 pandemic.