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SINGAPORE

Trophy Assets Drive Investment Activity in Asia Pacific in 2015

Hotel operators have been an exception to the trend and in 2015 have continued to pursue their asset light strategies, capitalising on the demand for trophy properties.


​​​​SINGAPORE, 14 October 2015 -  The number of trophy hotel assets changing hands in Asia Pacific has surged in 2015 to levels unseen before, according to JLL's Hotels & Hospitality Group, which last month closed Asia Pacific's largest ever single hotel transaction, the US$938 million InterContinental Hong Kong. ​So far in 2015 there have been six recorded transactions of single assets trading, each with a value exceeding US$300 million.

Mike Batchelor, Managing Director of Investment Sales Asia, who led the landmark InterContinental transaction, said: "Historically we see one to two transactions a year in this 'mega category' due primarily to the ownership profile of trophy hotels across the region. They have often been built and, in many cases, are still owned by a family or a related entity. Assets tend to be passed from one generation to the next and are rarely offered to the market."

Hotel operators have been an exception to the trend and in 2015 have continued to pursue their asset light strategies, capitalising on the demand for trophy properties. In July, Hilton sold their Sydney hotel under a long term management agreement, similar to InterContinental Hong Kong deal.

According to Batchelor: "Historically, the profile of investors attracted to such opportunities has almost exclusively been the domain of Sovereign Wealth Funds or High Net Worth Individuals, who tend to hold the assets as part of a wider regional and global diversified property portfolio."

"In recent times, however, this buyer pool has been widening to now include Chinese insurance companies and private equity firms backed by 'core' funds who are also prepared to trade off the lower returns such investments offer."

"The lower returns are offset by the long-term growth prospects, given the difficulty of replicating such trophy assets. These landmark properties are almost always located in highly sought-after locations in the region's key gateway cities."

Chinese investors have become major players in the hotel market over the past 24 months and in 2015 alone have been responsible for acquiring US$5 billion worth of hotel assets outside of China.

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DateHotelCityKeysPrice (USD)Price Per Key (USD)
Sep 2015InterContinental Hong KongHong Kong503938 million1.8 million
Jul 2015Four Seasons Hotel Pudong and Four Seasons Place PudongShanghai187$382.1 million*
Jul 2015The Westin SydneySydney416348.7 million838,000
Jul 2015The Hilton SydneySydney579354.1 million612,000
Jun 2015Grand Hyatt Hong Kong (50%)Hong Kong5391.2 billion**
Renaissance Harbour View Hong Kong (50%)857

Hyatt Regency Tsim Sha Tsui

Hong Kong (50%)

381

*The sale price also included the remainder of the unsold residences (total RMB 2.3 billion)

**Three hotel portfolio sale (total HKD 18.5 billion), 50% interest​

About JLL

JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000.  On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $56.0 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.​