Fund manager’s payday as hotel giant takes keys for 15 venues
ASX-listed hospitality and cinema giant EVT is stepping up its involvement in the hotel sector, taking over the management of 15 venues in Australia and New Zealand that have been run by fund manager Pro-invest Group.
Initial payment for the deal is $74 million. If the portfolio delivers better than expected income to its new manager, an additional scaled consideration capped at $30 million will be handed over.
It’s a management rights transaction, rather than a traditional property deal. Ownership of the real estate remains in three funds run by Pro-invest, a fund manager co-founded by Ron Barrott and Sabine Schaffer.
The portfolio comprises 10 Holiday Inn Express hotels in Sydney, Brisbane, Melbourne, the Sunshine Coast and elsewhere. Sydney’s Kimpton Margot and two Hotel Indigo venues in Melbourne and Sydney are included, along with Voco in Auckland and the Sebel in Canberra.
In all, the Pro-invest Hotels portfolio comprises close to 3200 rooms. It will seed EVT’s new venture, a third-party hotel brand management business. The operation’s aim is a form of white-labelling, allowing hotel owners to franchise a third-party brand while tapping into EVT’s management capabilities.
“The launch of EVT Connect Hospitality, seeded by the acquisition of PIH, represents a further initiative to grow hotel earnings,” chief executive Jane Hastings said.
“EVT Connect Hospitality will enhance EVT’s ability to deliver value for asset owners who seek to franchise a third-party brand, supported by the expertise of the PIH team and now boosted by the ability to leverage our extensive EVT Group expertise.”
EVT’s biggest shareholder is Rich Lister Alan Rydge, who holds around 40 per cent and chairs the ASX-listed business. He said the deal was a reflection of EVT’s “desire to invest in new opportunities to grow the asset-light hotel management business”.
The deal also stacks up for Pro-invest, whose platform has around $3 billion of commercial real estate held in discretionary funds, joint ventures, and managed accounts, co-founder Barrott told The Australian Financial Review this week.
“We were approached by EVT, who we’ve known over the years well, and have a lot of respect for them.
“It made sense from our point of view because they have such a larger platform. While we have a very efficient structure for managing hotels, they, with a larger platform, can give it even more reach, through economies of scale.”
While Pro-invest has a separate portfolio of leased hotels through its Vista business as well as investments in office and retail real estate, the EVT deal comes as it forges into fresh ventures in the broader accommodation sector, through co-living and build-to-rent projects.
In June this year, it struck a deal to partner with Japan’s Kajima Corporation to develop a portfolio of build-to-rent housing across Australian cities that could be worth as much as $1.5 billion in five years.
