HOTEL SALES An analysis of hotel sales in Australia by Colliers International RESEARCH AND ANALYSIS REPORT CLIENT LOGO TO APPEAR HERE

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1 CLIENT LOGO TO APPEAR HERE RESEARCH AND ANALYSIS REPORT HOTEL SALES 2017 An analysis of hotel sales in Australia by Colliers International Accelerating success.

2 2017: a year in review Following the three strongest years on record, hotel sales volumes across Australia eased back in 2017, reaching $2.02 billion on 47 sales tracked by Colliers International. Whilst moderating, volumes remain well above the long-term average of $1.25 billion. Some of the notable trends evidenced through the year include: Victoria topped the nation with 45% of total hotel sales by value, compared with 23% in NSW. sales in Melbourne included the Hilton Melbourne South Wharf (the year s largest transaction at $230 million), Sheraton Melbourne and the Mercure Melbourne Treasury Gardens. Mercure Geelong represented the largest transaction outside of the Melbourne CBD. After dominating activity over the past few years, NSW was very subdued in 2017, with only eleven transactions in total and none in the core Sydney CBD. A number of large metropolitan hotels transacted, notably the InterContinental Sydney Double Bay and the Mercure Sydney International Airport. There was significant activity in relation to new turnkey developments with hotel development deals totalling $394 million, almost one quarter of the total volume. The limited level of existing inventory being offered is pushing investors into the development and turnkey space. Key development transactions included the W Melbourne, Four Points by Sheraton Central Park Sydney and Quest Penrith. Offshore capital continued to dominate, accounting for 62% of the total sales value but with a notable broadening of the capital base with purchasers from Japan, Singapore, USA, Hong Kong, Vietnam, Germany and the UAE. Chinese investors dropped from 40% of total sales in 2016 to just 9% in 2017, as restrictions on outbound capital slowed activity. Strong growth in Australian tourism is attracting more diverse investors to the sector. Origin of Purchasers by Value ( >$5 million) $3,750 $3,500 $3,250 $3,000 $2,750 $2,500 $2,250 $2,000 $1,750 $1,500 $1,250 $1,000 $750 $500 $250 $0 Benchmark Passing Yields of Transactions 10% 9% 8% 7% 6% Millions Australia Hong Kong Other Singapore USA Japan China Source: Colliers International Based on the availability of yield evidence, the past four years has seen a continued compression of yields; from over 9% in 2013 to just under 6% in 2017 and approaching the level of the last cyclical low in % 4% Source: Colliers International is likely to see similar patterns to 2017, with limited opportunities in Sydney and Melbourne, as owners in those markets continue to enjoy strong cashflow. More activity is likely to occur in the metropolitan markets and other State capitals, as owners capitalise on limited inventory in the market. The robust pipeline of new hotels should see activity increase again over the medium term. Yield Ranges Transactions 12.00% 10.00% 8.00% As always, we welcome your thoughts and feedback. Gus Moors Head of s Australia Yield Range (%) 6.00% 4.00% 2.00% 0.00% Sydney Melbourne Brisbane Perth Other Capital Cities Non CBD Locations Source: Colliers International Source: Colliers International

3 NSW $3,250,000 $3,400,000 $6,000,000 Cooks Endeavour Motor Inn Blue and Conference Centre Quality on Olive Motel Motel $154,762 $141,666 $98,361 Tweed Heads Katoomba Albury $29,400,000 $105,000,000 $32,000,000 Quest Penrith (under construction) Intercontinental Sydney Double Bay Airport Sydney International Motor Inn May 2017 May 2017 Serviced Apartments $272,222 $750,000 $266,666 Property under construction. This price reflects hotel component only Penrith Double Bay Mascot sales in Australia

4 NSW $15,000,000 Ibis Sydney Thornleigh $145,000,000 Four Points by Sheraton Central Park (under const.) $76,400,000 Mercure Sydney International Airport May $142,857 Jul $488,215 Nov $ 281,919 This is a development site transaction. Thornleigh Sydney Wolli Creek $17,500,000 Quest Nowra Sep 2017 Serviced Apartments 81 $216,049 Nowra 4 sales in Australia 2017

5 NSW VIC $220,000,000 $9,000,000 $230,000,000 W Melbourne (Collins Arch Development) Best Western Plus Brooklands of Mornington Hilton Melbourne South Wharf Feb 2017 Feb $748,299 $169,811 $598,958 This is a turnkey transaction. Mornington Melbourne Melbourne $15,000,000 $24,200,000 $19,700,000 Camberwell Serviced Apartment Mercure Geelong Flagstaff City Inn Apr 2017 Serviced Apartments $535,714 $175,362 $469,048 to be demolished for redevelopment. Hawthorne East Geelong West Melbourne sales in Australia

6 VIC $27,100,000 $36,200,000 $24,000,000 All Nations Backpackers Morning Star Estate All Seasons International Bendigo Backpackers Jun 2017 Jun 2017 Aug 2017 Backpacker Resort N/A N/A $311,688 Melbourne Sale price includes management rights. Facility has 100 gaming machines. Mount Eliza Bendigo $70,000,000 Circa $135,000,000 $43,000,000 Mercure Melbourne Treasury Gardens Sheraton Melbourne Adina Melbourne Oct 2017 Nov $426,829 $775,862 $661,538 Sep 2017 to be demolished for redevelopment. Melbourne 6 sales in Australia 2017 Price reflects hotel component only. Melbourne Melbourne

7 $55,000,000 $7,750,000 Royce Dec $550,000 Melbourne Mercure Warragul Dec $164,894 Warragul NSW QLD NSW VIC $140,000,000 Sheraton Grand Mirage Resort $7,100,000 Heron Island $16,000,000 Peppers Airlie Beach Resort Feb Island Resort 115 May 2017 Resort 59 $476,190 $61,207 N/A Sale price includes management rights. Gold Coast Gladstone Airlie Beach sales in Australia

8 QLD $6,000,000 $16,500,000 $6,150,000 Kingsford Smith Motel Hamilton New Inchcolm & Suites Paradise Inn Motel Jun 2017 Jun 2017 Jul 2017 Motel Motel $166,667 $330,000 $175,714 Redevelopment Site Brisbane Spring Hill Gold Coast $23,750,000 $77,000,000 $36,180,000 Nobbys Outlook Mercure & Ibis Brisbane Emporium Brisbane Sep 2017 Dec 2017 Dec 2017 Motel $641,892 $186,893 $354,706 Largest beachfront parcel of land available for redevelopment - can be redeveloped for 3 storey property. Gold Coast 8 sales in Australia 2017 Brisbane Brisbane

9 ACT & VARIOUS $17,000,000 Sundown Motor Resort $16,000,000 Quality Woden $55,000,000 Byron Bay & Apartments, Ibis Canberra Apr 2017 Motel 100 N/A Sale price also included the sale of 88 manufactured home sites. Aug $280,702 Aug & Serviced Apartment $132,212 Combined purchase. ACT, Canberra ACT, Woden NSW & ACT Byron Bay & Canberra SA $43,000,000 Mercure & Ibis Styles Grosvenor $7,050,000 Adelaide Royal Coach Nov $175,510 Apr 2017 Motel 49 $143,878 SA, Adelaide SA, St Peters sales in Australia

10 TAS $4,450,000 $15,550,000 $16,000,000 Villa Howden Hanlon House at Stanley Cape Wickham Links May 2017 May 2017 Jul 2017 Boutique Boutique Motel $445,000 N/A N/A This is a golf course transaction. TAS, Stanley TAS, King Island $73,500,000 $50,000,000 $12,500,000 Novotel Langley Crowne Plaza East Perth Aire West Perth WA TAS, Hobart Region Aug 2017 Serviced Apartments $287,109 $264,550 $195,312 Jan 2017 Mixed use project under constriction WA, Perth 10 sales in Australia 2017 WA, East Perth WA, West Perth

11 WA $11,000,000 Sebel Mandurah $8,427,000 $12,650,000 The Royal Palms Residences and Resort Indian Ocean Scarborough Jul $130,952 Jun 2017 Motel 24 $351,125 Jun $214,407 WA, Mandurah WA, Busselton WA, Scarborough sales in Australia

12 UNRIVALLED EXPERIENCE With a dedicated team of hotel sales professionals, valuers and advisors, our strong regional representation enables us to provide local expertise in a global context. We represent one of the largest and most experienced teams of hotel specialists across Australia and New Zealand. We offer a full range of hotel property solutions... Agency sales across all hospitality types Purchaser due diligence and negotiation Sale of hotel management companies Valuation of hospitality property and business utilising Australia s largest dedicated hotel valuation team Operator search, selection and negotiation for management agreements, leases and franchises Operational reviews Debt and equity solutions for property owners and hotel management companies Asset management services Research and consultancy services Development advisory and feasibility Wholesale funds investment Across every hospitality property and business type... Full service hotels and motels Limited service hotels Serviced apartments Pubs Tourist parks Golf courses Marina Management companies Student accommodation Everywhere 24 offices across Australia 16 offices in New Zealand Let us accelerate your success. Speak to one of our experts today. E: au.hotels@colliers.com 12 sales in Australia 2017

13 DARWIN Tony West Director BRISBANE Neil Scanlan National Director Baden Mulcahy National Director Leo Carne Executive SYDNEY Gus Moors Head of s Karen Wales Director Nigel Greenaway National Director Michael Thomson National Director Chris Milou Director Robert Bird Assistant Valuer Denise Kirk Analyst s MELBOURNE Guy Wells Associate Director sales in Australia

14 Colliers International does not give any warranty in relation to the accuracy of the information contained in this report. If you intend to rely upon the information contained herein, you must take note that the information, figures and projections have been provided by various sources and have not been verified by us. We have no belief one-way or the other in relation to the accuracy of such information, figures and projections. Colliers International will not be liable for any loss or damage resulting from any statement, figure, calculation or any other information that you rely upon that is contained in the material. 14 sales in Australia 2017