Mirvac & NRMA Put Portfolio To Market

Mirvac and NRMA have put their jointly-owned portfolio of 11 Travelodge hotels, managed by Toga Far East Hotels, to the market


Key Points:

  • Prior to the pandemic, Mirvac had sought to sell its 50% share to the NRMA

  • "Due to the impacts of COVID-19 the Tucker Box Hotel Group will breach a lending covenant within the next 12 months"

  • Revenue fell 36% in the 2020 financial year


Mirvac and NRMA have put their jointly-owned portfolio of 11 Travelodge hotels, managed by Toga Far East Hotels, to the market as the accommodation sector begins to slowly recover from the devastating impacts of the pandemic.


The COVID pandemic sent occupancy rates plummeting into the single digits and forced the closure of hundreds of hotels and about 240,000 hotel rooms across the country.


It has frozen the hotel investment market amid expectations values could fall up to 30%. Some expect the portfolio to be a development play.


"Given the expected demand for affordable accommodation and the forecast improvement in domestic travel, both NRMA and Mirvac have elected to commence a process to explore the interest in this portfolio, from both domestic and international investors and operators given the prime locations, weighting towards the attractive Sydney market and scale of the platform," the Mirvac spokeswoman said.


Prior to the pandemic, Mirvac had sought to sell its 50% share to the NRMA, but the two parties could not come to an agreement.


According to Mirvac's 2020 annual report, valuers assumed that it could take three to four years for hotel room night demand to normalise.


While the joint venture complied with all borrowing covenants as of June 30, based on estimates made at the time it was considered likely "that due to the impacts of COVID-19 the Tucker Box Hotel Group will breach a lending covenant within the next 12 months".


"The joint venture is responding to this matter including engaging in discussions with the joint venture's syndicated lenders," the Mirvac report said.


The hotel group's revenue fell 36% in the 2020 financial year to $27 million and operating profit after tax declined 41% to $20 million.

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