Realising Value

Chifley Hotel

Newcastle, New South Wales

Acquisition Date 2009

Project Value $70 million

Equity Investment $9.3 million

Investor IRR p.a. >20%

Asset Class Hotel

Investment Strategy Acquire, Develop, Sell

Project Highlights
  • Obtained management agreement prior to settlement
  • Delivery ahead of time and budget

White & Partners capitalised on an opportunity to partner with a local Newcastle developer to acquire a mixed use, serviced apartment site in Newcastle’s Honeysuckle Precinct, opposite the Harbour Foreshore. The proposed project included the development of 995sqm of retail accommodation, 71 serviced apartments and 10 residential apartments.

At the time, the banks did not look favourably upon the sector. To alleviate concerns from financiers, White & Partners negotiated a structured purchase which allowed time to source a hotel operator, Constellation Hotel Group, as well as finalising the management agreement prior to settlement. The agreement with Constellation Hotel Group secured a 6% p.a. cash flow post completion for the project for a minimum of three years. The cash flow not only enhanced the marketing of the apartments to investors, but also assisted in securing the bank debt on favourable terms.

The construction was undertaken by JML Group, a local Newcastle builder who also invested in the project. This alignment of interests was critical in the delivery of the project ahead of time and budget.

The Chifley Hotel was completed 24 months after settlement, with investors securing an IRR north of 20% p.a.