Folkestone buys Sydney hotel for new fund
Folkestone’s real estate funds management subsidiary, Folkestone Funds Management (FFM) has announced that its recently established Sydney Airport Hotel Fund had exchanged contracts for the acquisition of the Mercure Sydney International Airport Hotel for $76.4 million.
Additionally, the firm said the fund had secured underwriting commitments totalling $31.9 million, with $15 million provided by Folkestone, which was consistent with the company’s strategy to use its balance sheet to secure investment opportunities for its funds management platform.
The fund also secured a $49.4 million debt facility from one of the major banks which would provide the funds required to acquire the hotel and was inclusive of a $15 million short term debt facility.
FFM said it would be seeking to raise $50 million for the offer, which would be launched around 23 October.
Folkestone said it had forecast an equity IRR (internal rate of return) of 14.4 per cent per annum over the life of the fund, and a seven per cent annualised yield following the planned refurbishment, which would be undertaken in 2018.
Folkestone’s managing director, Greg Paramor, said: “The Folkestone Sydney Airport Hotel Fund will offer investors the opportunity to invest in a well-located hotel that is forecast to generate strong income returns and also provide the opportunity for capital growth from both the repositioning of the hotel and the positive outlook for the Sydney hotel market.
“We expect strong interest in the fund’s capital raising from our investor base given the attractive forecast returns.”
AUTHOR
Oksana Patron
Recommended for you
Lonsec and SQM Research have highlighted manager selection as a crucial risk for financial advisers when it comes to private market investments, particularly due to the clear performance dispersion.
Macquarie Asset Management has indicated its desire to commit the fast-growing wealth business in Australia by divesting part of its public investment business to Japanese investment bank Nomura.
Australia’s “sophisticated” financial services industry is a magnet for offshore fund managers, according to a global firm.
The latest Morningstar asset manager survey believes ETF providers are likely to retain the market share they have gained from active managers.
