Agreement has been reached for the sale of the 280 room Rydges Wellington hotel to NZ Hotel Holdings Asset LP (NZHHALP); a partnership between the $60 billion NZ Super Fund, The Russell Property Group, and Lockwood Property Group.
Rydges Wellington will join a significant tourism portfolio that already includes the Four Points by Sheraton and Adina Apartment Hotel Auckland, Holiday Inn Rotorua, BreakFree Hotel in Christchurch, and the Sofitel in Queenstown.
Dean Humphries, National Director of Hotels for Colliers, notes this is the largest hotel transaction in New Zealand in 2021, culminating in a record year of transactional activity for the market. To date, more than $300 million of hotels have been sold surpassing previous records reached in 2010 and 2015.
Humphries, who brokered this sale, says this was a complicated and challenging transaction requiring the consolidation of 280 strata titled hotel units and related facilities from more than 200 individual owners.
“It is rare that agreement can be reached from so many owners. To my knowledge this has never been achieved at this level; the recent sale of the 82 room Sofitel Queenstown was also acquired under a similar structure,” Humphries says.
“The secret to the consolidation model involves a range of property expertise across multiple disciplines and credit must ultimately be given to Brett Russell, Managing Director of the Russell Property Group, BC Chairperson for Rydges Wellington Graham Wilkinson, and the entire NZHHALP team for the initiative and patience to make this happen.”
Humphries says an arbitrage was created by consolidating the units, which enabled individual investors to achieve a higher coupon value than if they had sold individually.
“At this stage, the prices paid for the individual units and other components associated with the hotel remain confidential to all stakeholders. However, on completion of the entire acquisition, including upgrade and refurbishment costs and the amalgamation of all BC titles and management, we expect the hotel to have a combined value in the order of $100 million.
“Hotels in Wellington of this quality are rarely sold, so this was a win-win for everyone. The wider process has taken more than 18 months and is a testament to all involved.”
Originally developed in 2007 and sold to investors in New Zealand, Australia, Asia, and the United Kingdom, the four-star Rydges Wellington is the largest hotel in the capital.
Its 280 rooms include 19 suites, and the hotel offers five conferencing spaces, a fitness centre, lap pool, spa and sauna, and an award-winning restaurant and bar. Strategically located near Parliament and adjacent to the harbour precinct, Rydges Wellington is the closest hotel to Sky Stadium, and has a strong base of corporate, government, and leisure demand.