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Shakespeare Property Group, the property arm of boutique investment manager Prime Value Asset Management, has secured a contract to acquire the heritage Darling Harbour hotel, Woolstore 1888 by Ovolo, with plans to introduce a new hotel operator for the property.
While the purchase price has not been disclosed, Shakespeare says the four-star property, which has 90 guest rooms over four levels, will be placed into a new wholesale investment trust that will deliver an initial distribution of 6 per cent in the first two years, rising to 8 per cent from the third year.
The five-storey Woolstore 1888 by Ovolo building was formerly a wool store dating back to 1888, with the sandstone structure converted into a four-star hotel in 2013.
The property, which has a site area of 626sqm, is the fourth oldest of 21 wool stores that currently survive in Sydney.
The Hong Kong-based Ovolo Group, part of Hind Hotels & Properties Ltd, acquired the property in 2014 and undertook renovations in 2022.
Shakespeare Property plans to fund the acquisition via an equity raising from wholesale investors through a close-ended unlisted trust that will have the Woolstore 1888 as its sole asset. Shakespeare says the trust will target an internal rate of return of 16 per cent.
“The Woolstore 1888 is a stunning hotel asset which is in great condition, in a great location, and doesn’t require major capital expenditure for us to realise its full potential,” says Richad Saab, the vice president of hospitality assets and investments at Shakespeare Property Group.
“We think there is scope to improve the asset. But we also think this property speaks for itself, as one of Sydney’s finest heritage hotels.
“The location is also attractive with Darling Harbour poised to benefit from Mirvac’s $2 billion harbourside redevelopment, and from state government infrastructure including the Pyrmont Metro train station.”
The Melbourne-based Shakespeare Property Group currently owns and operates four hotels totalling 1,100 rooms, including the Pullman Cairns Hotel.
Saab notes the acquisition is supported by the strength of the Sydney hotel market where revenue per available room is now about 13 per cent higher than 2019.
“The Sydney hotel market is attractive and has shown strong recovery since COVID,” he says.
“We’re also seeing rapidly growing demand in the boutique and lifestyle accommodation market, and the Woolstore 1888 is well placed to capture this growth.”
Shakespeare plans to secure a new hotel operator for the property after settlement, although the property group has yet to make a formal announcement on this.
Following the sale, Ovolo Hotels will still operate seven properties in Australia, including The Inchcolm and The Valley in Brisbane, Nishi in Canberra, Laneways in Melbourne and Woolloomooloo in Sydney.
“We are delighted to have the future of The Woolstore 1888 by Ovolo in the capable hands of The Shakespeare Property Group, having operated this property for the better part of a decade,” says Dave Baswal, CEO Ovolo Hotels.
“This sale will allow us to focus on new markets across Asia Pacific with high growth opportunities aligned to the strategic direction of the greater group whilst diversifying our portfolio.”
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