Weekly Transaction Update - 10th March
For Week ending 10th March 2017
This weeks transactions moved substantially higher towards $600M due to several large deals concentrated in the Hotel and Retail sectors.
With 3 weeks till the end of the 1st Quarter, activity in the commercial sector has fallen significantly this year with sales volume currently less than half of the volume in the first quarter of 2016. There remains over $1.3 Billion of commercial assets available on the market (with some of these in due diligence) so a slowing down in transactions may reflect a mis-match is emerging between vendor and purchaser price expectations.
Meanwhile, the largest transaction this week was the sale by Host Hotel & Resorts and Plenary Group of the Hilton Hotel Melbourne for $230M. With 396 rooms, the sale price represents $580,000 per key. In other recent 5 star Hotel transactions, Diasho recently agreed to acquire the Collins Arch hotel on completion at $748,000 per key, whilst Star Entertainment Group paid $477,000 per key for the Sheraton Mirage Gold Coast. The next major Hotel asset to test the market will be the newer Sheraton Melbourne which contains 174 rooms, with agents suggesting it will sell for around $130M+ ($747,000 per key), clearly priced from the Collins Arch transaction. The Hilton sale may dampen these expectations or will prove to become a great sale price - time will tell.
The other major transaction this week was the sale by Balmain Group and Goldman Sachs of the Canberra Outlet Centre. The Centre was part of the DFO group, which collapsed several years ago. US investment bank Goldman Sachs won control of the property in a distressed debt play and poured in millions of dollars to improve and stabilise the complex. This work included securing changes to the Territory Plan to allow for a supermarket on the site which has yet to be implemented. The Centre was acquired by Armada Funds Management on behalf of German pension fund giant, Deka Immobillen, for $135M ona yield of 6.3%.
Another signal of the strength of the market this week was from the sale of 174 Bourke Street. The asset was acquired by a private investor in 2014 for $11.5M and has been refurbished and sold this week for $33M.
A number of mid-sized retail assets also changed hands this week - Scroll through the list below or head to the Australian Property Transaction Data Map for further details.
This Weeks deals