Deals

GIC closes A$135m exit in Melbourne

Following a particularly acquisitive period, GIC has also taken advantage of the outbound appetite of Chinese developers to make a divestment.

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The $285 billion Singaporean sovereign wealth fund GIC Private Limited has fully divested what was its very first property asset in the city of Melbourne, selling the Park Hyatt hotel in Melbourne to Chinese developer Fu Wah Group.

The deal involves both the 240 room hotel and an adjoining commercial car park. Financial details of the deal were not disclosed, but media reports have pegged the deal at around A$135 million (€93 million; $126 million). Developed in 1999 by Australian property developer Lustig & Moar at a cost of $150 million, the five-star Park Hyatt is considered one of Melbourne’s landmark hotels.

In 2003, GIC bought the Park Hyatt as its first real estate investment in Melbourne for approximately A$126 million. At the time, GIC Real Estate president Ngee Huat Seek said, “Although the hospitality real estate cycle is still finding its bottom in Melbourne, we are confident that our arrangement with Hyatt will see us through the bottom of the cycle. We have confidence in the Park Hyatt brand to realize the full potential of this property.”

Coincidentally, Park Hyatt also represents Fu Wah’s first foray into the international market. It is only the latest Chinese developer to buy into the Australian market. Greenland Group, for example, has committed $600 million to build Sydney’s tallest apartment tower, while China’s Country Garden has launched an 800-apartment complex development in Sydney.

Since its first foray, GIC has invested in at least one other Melbourne property project, partnering with Australia’s CFS Retail Property Trust and the Myer family to acquire and develop the site of Myer Melbourne shopping complex for a combined investment of A$1.1 billion (€703 million; $971 million) in 2007. Following some delays, that project is scheduled for completion this year.

Overall, GIC has invested about 3 percent of its capital in the Australasia region across all asset classes. Its most prominent assets include the Chifley Tower and Queen Victoria Building in Sydney.