As the cloud of political uncertainty lifted in Australia, global investment fund Abu Dhabi Investment Authority (ADIA) provided a fillip to the country's hotel industry. ADIA bought Australia's largest hotel owner, Tourism Asset Holdings, for a record-breaking $800 million. The deal gives hope for M&A activity and foreign investments picking up, in the country.
Under the deal, ADIA, which is one of the world's biggest sovereign wealth funds, gets ownership of a portfolio of 31 properties, which is also one of the largest leased property portfolios of its kind in the Asia Pacific region. ADIA is a major investor in the hotel business around the world.
But the ADIA-TAHL deal is not the only one of grab headlines. This deal comes at a time when other foreign investments have been seen in the hospitality sector in Australia. Reports suggest that investors are inclined on hotels that cater to the business market rather than more risky resorts.
Recently, South Korea's Mirae Asset Global Investments and Malaysia's Starhill real estate investment trust snapped up key five-star properties in Sydney, Melbourne and Brisbane. However, the ADIA-TAHL deal dwarfs the other transactions.
Experts believe, the hospitality sector is well positioned for a recovery. Increased business travel along with the lower dollar has led not only to, growth in inbound travel but also encouraging corporate activity from foreign investors.
The buyout gives ADIA a high-growth platform to expand its business at a time when the market is preparing for a wave of new properties launches.
The sale was handled by Macquarie Capital.
The key strength of the portfolio lies in its strong exposure in the mid-market segment. The group, wide spread across Australia includes 3.5-star to 4-star hotels.
TAHL chief executive Matthew Eady was quoted as saying: "We chose to run a discreet, targeted sale process and we were very pleased with the response we received, which is a testament to the strength and performance of the underlying portfolio."
Major TAHL properties include Novotel and Ibis Darling Harbour in central Sydney, Novotel and Ibis at Sydney Olympic Park, and Novotel Canberra. Reports said, the portfolio will continue to be operated by French hotel chain Accor.