Famed hotels in play as fund manager holds on

Fund manager Elanor has put some of the country’s best hotels on the block as it battles to survive.

Peppers Cradle Mountain Lodge is for sale with JLL Hotels & Hospitality Group.

Property funds manager Elanor has been unable to offload hotels in its troubled hospitality vehicle in one line and is carving up its portfolio while it remains locked in talks with key lenders to ensure its survival.

Plans to sell the entire portfolio of Elanor hotels to one major party collapsed with various US groups including investment firms KSL, KKR and Blackstone walking away some weeks ago, sources said.

Instead the piecemeal divestment of the 17 hotels and resorts located in Australian capital cities and regional locations held within the Elanor Hotel Accommodation Fund continues apace with five assets being marketed via individual sales campaigns, via JLL, according to a statement to the ASX on Wednesday.

Assets now on the market include the popular Mayfair Hotel Adelaide, Peppers Cradle Mountain Lodge in Tasmania, Parklands Resort Mudgee in NSW’s central West, Panorama Retreat and Resort in Kalorama, Victoria, and Byron Bay Hotel and Apartments in northern NSW with a combined value of more than $230m.

The Mayfair Hotel Adelaide, which is expected to sell for around $90m, has been the most sought after asset, with Mark Bullock, head of acquisitions and co-founder of Ark Capital Partners, the most interested party, several sources said.

The company said it had sold $53.5m of fund assets. These consist of smaller regional Elanor hotel assets handled by HTL’s Andrew Jolliffe and Elanor insists selling off individual properties will result in the best prices.

Senior hotel executives were critical of Elanor’s previous handling of the hotels, saying there was no independence in the management of the hotels, no transparency, and the assets should have been operated independently.

Elanor Investors is selling the Parklands Resort & Conference Centre in Mudgee

Nevertheless Elanor is hoping to get book value for the assets. The most recently disclosed book value of the Mayfair Hotel was $91.5m in early 2024, the Cradle Mountain Lodge was valued at $80m, Parklands Resort Mudgee came in at $24m, the Panorama Retreat at $10m and the Byron Bay Hotel and Apartments at $36m.

Elanor said in a statement that “further EHAF assets are currently in due diligence processes or are under offer”.

All up, Elanor said it had sold off about $225m worth of properties across its funds since July and another $250m worth of assets were in due diligence.

The company is also talking to larger players about selling its co-investment holdings in some funds, which may break out of its orbit. It has already recapitalised an office fund by getting the backing of billionaire Primo Smallgoods founder Paul Lederer.

The Elanor Property Income Fund sold off the Manning Mall and Northway Plaza and has put Gladstone Square on the block. Also on the retail side, its has struck terms to sell the Waverley Gardens shopping centre in Melbourne to Vicinity Centres for about $180m.

Elanor’s longer-term prospects remain uncertain as it must win over lenders. Keyview has an $85m facility and the company is in talks with FIIG which arranged $40m worth of corporate notes. The noteholders in December voted to reserve their rights and implement a standstill for 90 days, which ends on March 19, and restructure talks are under way.

Elanor expects the lenders to support its stabilisation but noted that options including selling the business remain on the table.

The company’s acquisition of Challenger’s Australian real estate funds management business, which gave it carriage of $3bn of assets, has been a lifeline but big players are believed to be positioning if Elanor does not recover and again trade on the ASX.

Originally published as Famed hotels in play as fund manager holds on