NZ Super strikes record US$201m New Zealand hotel portfolio deal

New Zealand’s NZ Super Fund has agreed to invest NZ$300m (US$200.8m) into a hotel portfolio established by the Russell and Lockwood Property groups, marking the country’s largest off-market hotel deal ever.

The $42bn sovereign wealth fund acquired the BreakFree Hotel in Christchurch, Auckland’s Four Points by Sheraton and Adina Auckland Britomart hotels for a new hotel platform, according to an announcement.

“New Zealand needs additional hotel accommodation to support both growing domestic tourism and international arrivals,” said NZ Super Fund’s Head of Direct Investments Will Goodwin.

Four Points by Sheraton, Auckland
Four Points by Sheraton, Auckland (image: NZ Super Fund)

“There are clear capacity constraints in this sector and we look forward to working with our partners to identify opportunities for future growth.”

New Zealand’s tourism industry continues to show promising growth, with total tourism expenditure increasing 7.7% year-on-year to $39.1bn at end-March 2018.

However, broker Colliers International projects a shortfall in hotel rooms, with more than 4,500 extra beds needed across the country by 2025.

Auckland will need as many as 4,300 new hotel rooms, yet only 2,500 are in the pipeline.

Colliers International national director of hotels Dean Humphries, who worked on the deal, said it was the single largest off-market hotel transaction in New Zealand’s history.

“When the Russell and Lockwood Groups were considering a divestment strategy, the possibility of retaining these assets in New Zealand hands was an appealing objective for the two Kiwi entities,” he said.

The partners have established two joint ventures, with one to own properties operating as hotels and the other to manage properties and identify future opportunities.

The New Zealand Government started the NZ Super Fund in 2003 to help pre-fund universal superannuation. 

Russell Group is a privately-owned construction and property group in New Zealand.

Lockwood Group is a private investment group owned by Steve Lockwood, a founder and major shareholder of commercial insurance broking business Crombie Lockwood Group.

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