Developer BPM, headed by Jonothan Hallinan, a BRW Rich List “Young Gun” in 2016, has sold a Melbourne hotel for $91.3 million to investment fund Interglobe Enterprises – a company established by Indian father and son Kapil and Rahul Bhatia in 1989, and which has interests in aviation, hospitality and travel.
The asset: a 30-storey, 241-room complex at 33 King Street, on the south-west corner of Flinders Lane, will be developed in coming years by BPM, then handed over to be managed by Toga Far East under the Quincy hotel brand.
On a 349 square metre site, the investment hit the market in June with price hopes of about $80 million.
BPM acquired 33 King Street from Malaysia-backed developer Asia One for $12.35 million two years ago before revising an approved development permit.
“Given the risks associated with developing in the current lending environment, BPM sought a unique fund-through arrangement to remove any reliance on local financiers,” Mr Hallinan said of the sale to Interglobe.
“We have proven as a business that we can prevail during times of economic uncertainty through our agility alone.
“Our extensive global relationships, and our ability to innovate the development sector and its existing finance structures, allows the BPM business to see continued growth when many local developers become victim to the property cycle.”
BPM development director Tom Howgate said the appetite from international investors for the site was substantial. “The ability to partner with an experienced local developer like BPM was certainly seen to de-risk the project’s delivery, however it was the composition of the deal and its unique terms that made the opportunity so sought-after.
“The structure of this contract is a first in the Australian market and is the result of several weeks of collaborative discussion,” Mr Howgate said.
Earlier this year Mr Hallinan, along with another property investor, John Knowles, listed for sale another unbuilt hotel in the Melbourne CBD – at 9-11 Exploration Lane. This proposed property, spreading over a site of about 170 sqm, is being sold as a 34-level, 130-room boutique hotel, with price expectations of about $50 million.
Two weeks ago we reported prestige accommodation provider Hyatt Centric had leased all of an unbuilt 10-storey, 153-key hotel in South Yarra from Alfasi Property Group. Planning approval for this complex, earmarked for a site at 2-10 River Street, is sitting with the City of Stonnington council.