Michael Gu’s funds management and investment group i-Prosperity in voluntary administration

One of the most active investors in the Australian hotel industry is in voluntary administration, in a blow to the sector.

 

One of the most active investors in the Australian hotel industry with around $1bn worth of deals in play, both locally and in the US, entered voluntary administration on Thursday night.

The move is a major blow to the struggling hotel investment sector given Michael Gu’s i-Prosperity Pty Ltd group, a major financial advisory firm for Asian investors, was one of the sector’s largest and most active investors.

Thirteen entities associated with the i-Prosperity Group, which bills itself as a funds management and investment group, have been caught up in the voluntary administration including i-Prosperity Pty Ltd, i-Prosperity Group Holdings and Cornerstone Capital Investment Group.

“Our urgent focus is on stabilising the i-Prosperity Group and commencing a full and thorough investigation into its affairs, including certain court proceedings that remain on foot,” said voluntary administrator and Cor Cordis Partner Barry Wight in a statement on Thursday night.

“It remains too early to determine whether a viable restructure plan can be developed, but we look forward to working closely with the i-Prosperity Group’s stakeholders over the coming weeks,” Mr Wight said.

i-Prosperity Group was touted as the buyer of the French owned AccorInvest $250m portfolio last September, but it is understood that the deal is yet to settle.

Under that transaction, billed as the largest hotel deal of 2019, i-Prosperity Group was to have bought a mix of 23 properties and leased interests in Sydney, Melbourne, Canberra, Brisbane and Perth along with several major regional cities.

The AccorInvest portfolio spans 17 owned properties, comprising 1797 rooms. Four are branded Ibis hotels and the other 13 are ibis budget hotels.

Notable assets include the ibis Hotel & Apartments Melbourne, ibis Sydney Airport and ibis budget Sydney Olympic Park. The six lease interests include The Como MGallery by Sofitel in Melbourne, the Novotel, Mercure and ibis hotels in Brisbane and the Mercure and ibis hotels in Perth. AccorInvest is the spun-off hotel investment platform of Paris-listed AccorHotels.

In a much larger deal announced in March, i-Prosperity announced it had bought seven Kimpton branded Hotels in the United States in a $720m deal, in a joint venture with a Singapore group Soilbuild Group Holdings on behalf of local and offshore investors. The vendor was Xenia Hotels & Resorts, a New York listed hotel REIT.

In 2016, iProsperity Group, bought 333 Kent Street in Sydney for the symbolic price of $88.8m (888 is considered a lucky number in China). The site was slated for the development of a luxury hotel and residential apartment block in the centre of Sydney’s booming western corridor.

It bought Melbourne’s Pullman on the Park in 2018 from Canadian real estate group Brookfield.