The NZ Super Fund said yesterday it was investing in a $300 million hotel portfolio established by the Russell Group & Lockwood Property Group, creating a platform for the fund to invest further in New Zealand’s tourism sector.
The fund’s phased investment, which is subject to normal closing conditions, includes the Four Points by Sheraton & Adina Auckland Britomart in Auckland, the BreakFree Hotel in Christchurch, and an intention to acquire & develop additional sites.
Under the arrangement, 2 joint ventures have been created, one to own properties operating as hotels and the other to manage properties and identify opportunities.
Russell Group managing director Brett Russell said the venture would create an opportunity for a strong New Zealand-owned portfolio within the hotel & tourism sector, while Lockwood director Steve Lockwood said the significant opportunity for growth in the sector was a major motivation for the deal.
Mr Lockwood said: “The partnership provides a unique set of skills which will enable us to capitalise on the opportunities which become available in this sector throughout metropolitan & provincial New Zealand.”
A first step for fund
The Super Fund’s head of direct investments, Will Goodwin, said the fund had been considering opportunities to invest in the sector: “This partnership will give the fund exposure to New Zealand’s fast-growing tourism sector, diversify our investment portfolio and help support the industry’s strategic objectives.
“New Zealand needs additional hotel accommodation to support both growing domestic tourism & international arrivals. There are clear capacity constraints in this sector, and we look forward to working with our partners to identify opportunities for future growth.”
Tourism is New Zealand’s largest export industry in terms of foreign exchange earnings and directly employs one in 7 New Zealanders. Total tourism expenditure rose 7.7% ($2.8 billion) in the March 2018 year to $39.1 billion.
Despite this growth, New Zealand is projected to have a significant shortfall in hotel rooms, with more than 4500 extra beds needed by 2025, according to Statistics NZ’s 2018 tourism satellite account. Colliers said in its regional hotel market analysis & forecasting Auckland faced the biggest constraint, with a requirement of up to 4300 new hotel rooms but only 2500 projected to be built.
The Russell Group, headed by Brett Russell, is one of New Zealand’s largest privately owned & operated construction & property organisations. Dominion Constructors Ltd is one of the largest commercial construction companies and has been involved in building many hotels for its clients.
The group started housing, repair & maintenance and interiors businesses in 2014-16, and bought & created scaffolding businesses through the same period.
Through Russell Property Group Ltd, the group has an established track record in the development & ownership of hotels. It’s converted & built the Four Points by Sheraton, Adina Auckland Britomart & BreakFree Christchurch. The group’s latest project, the QT Auckland, is due to open next year.
Steve Lockwood was one of the 3 founders & major shareholder of Crombie Lockwood (NZ) Ltd, which from 1983 grew into New Zealand’s largest independent commercial insurance broking business.
The founders sold the business in 2007 to ASX-listed Wesfarmers Ltd, which onsold the company in 2014 to NYSE-listed insurance broker & risk advisory business Arthur J Gallagher & Co. Mr Lockwood continues as managing director of the wider Arthur J Gallagher Australian & New Zealand businesses and is a longstanding investment partner of the Russell Group.
Attribution: Joint release.