Market looks forward to hotel influx

Hotel sales and floats of operators will dominate the sector in coming months, say agents.
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Investors are waiting for the official nod on the proposed $500-million float of Mantra, which owns and operates hotels in Australia, New Zealand and Bali. Its latest deal was the management of the Sentosa Villas in Seminyak.

Brokers said overseas operators, such as the Intercontinental and Hilton chain, traded on price multiples of about 16.

It was said the preliminary documents indicated Mantra could have $447.7 million revenue in the 2013-14 financial year and $62 million earnings before interest, tax, depreciation and amortisation.

In the documents being sent to investors, Mantra management, headed by Bob East, says it expects earnings growth of 9.7 per cent in the next two years, with a forecast profit of $32.6 million profit in the year to June 2015.

The float is expected to be priced at 13 to 16 times on a price-to-earnings basis, which would value the group at about $500 million.

The Mantra Group is the latest owner-operator to embrace the strategy of having a combination of hotels, apartments, retail and commercial, in the one development.

On the hotel side, the 47-room Newport Mirage Hotel in Sydney’s Pittwater area on the Northern Beaches is being brought to market. Industry experts say between $10 million and $12 million could be achieved.

CBRE Hotels’ Andrew Jackson, Joel Fisher and Paul Kapiris have been appointed to steer the sale of the freehold going concern offering on behalf of the vendors, the Bayfield Family.

The Bayfields also own the Newport Arms Hotel, The Dee Why Hotel and Bayfields Liquor Superstore. The family has owned the Newport Mirage Hotel since 2000.

The four-star hotel and function centre is expected to have strong interest from both institutional and high-net-worth investors, both domestically and from Asia.

”Waterfront Sydney hotel properties are offered to the market rarely. Experienced hotel investors know that these assets have performed very strongly over the past decade, and the forecasts for Sydney in the medium to long term are positive,” Jackson said.

”The hotel is offered with vacant possession, which is not often the case with hotels in the Sydney metro area. We expect that there will be keen interest from local investors as well as national and international operator companies,” Kapiris said.

”The Newport Mirage Hotel neighbours one of Sydney’s most iconic pubs, the Newport Arms, and is one of the best conference, wedding and events centres in northern Sydney. However, there is certainly room for improvement in terms of trade.”

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