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January 29, 2020  

Australian Firm Buying Bundle of US Hotels

Australian investment manager iProsperity is making its first foray into the U.S. hotel market with an agreement to pay roughly $485 million for seven boutique properties.

The firm has emerged the winner in a bidding contest for a 1,124-room portfolio of Kimpton hotels, scattered across the country. Newmark is brokering the sale on behalf of Xenia Hotels & Resorts of Orlando. The pricing works out to about $431,000/room. If completed, the trade would be the largest of a U.S. hotel portfolio in more than a year.

The properties were offered unencumbered by brand and management agreements, which drew a deep pool of bidders that included hotel operators interested in bringing in their own flags. In the end, iProsperity struck a deal with InterContinental Hotels to keep its Kimpton brands in place. The U.K.-based operator has agreed to kick in some capital toward renovations.

The portfolio consists of:

Hotel Palomar, Philadelphia (230 rooms)

Hotel Monaco, Salt Lake City (225 rooms)

Hotel Monaco, Chicago (191 rooms)

Hotel Monaco, Denver (189 rooms)

Lorien Hotel & Spa, Alexandria, Va. (107 rooms)

Canary Hotel Santa Barbara, Calif. (97 rooms)

RiverPlace Hotel, Portland, Ore. (85 rooms)

In 2013, Inland American Real Estate purchased the three Monaco hotels for $189 million and the Lorien Hotel for $45.3 million in separate transactions. Two years later, the Oak Brook, Ill., REIT spun off its hotels into Xenia. That same year, the new REIT acquired the Palomar, Canary and RiverPlace hotels for a combined $245 million from Kimpton Hotels & Resorts, which was later acquired by InterContinental.

Sydney-based iProsperity manages investments for wealthy individuals, largely from Asia. The company previously has invested in hotels outside the U.S. In September, it teamed up with ZACD Group, a Singapore fund manager, to acquire 23 hotels with 3,046 rooms in Australia for $212.6 million (AUS).

The largest U.S. hotel portfolio trade last year was London-based Queensgate Investments’ $355 million purchase of four hotels with 916 rooms in New York, Miami Beach, Chicago and Los Angeles from a partnership including Sydell Group of New York and Yucaipa Cos. of Los Angeles. Hodges Ward Elliott brokered the deal.

The pending sale would be the largest such trade since December 2018, when Singapore-based ARA Asset Management paid $650 million for a 4,950-room bundle of Hyatt-branded hotels in 22 states. JLL brokered that sale for Lone Star Funds of Dallas.