Singapore group UOL buys Hilton Melbourne South Wharf

Publicly listed Singapore group UOL has agreed to pay $230m for the Hilton Melbourne South Wharf.

Hilton South Wharf hotel in Melbourne.

Publicly listed Singapore group UOL has agreed to pay $230 million for the Hilton Melbourne South Wharf in the city’s biggest hotel deal this year but it must still win Foreign Investment and Review Board approval.

UOL plans to rebrand the Hilton a Pan Pacific, with the aggressive acquisition of the 396-room hotel part of a plan to expand its portfolio and management businesses through Oceania.

It also controls the Parkroyal Melbourne Airport hotel, the Pan Pacific Perth as well as the Parkroyal Parramatta which was recently refurbished and extended to the tune of $25m taking it to 286 rooms.

But Pan Pacific is strongest in China where it has six hotels, as well as Singapore where it controls four hotels. It also lists properties in Indonesia, the US and Canada.

In Australia, UOL Group must also win the consent of eight independent hotel room owners to sell their leasehold interests in the Hilton Melbourne South Wharf. All up, 12 of the hotel rooms are controlled by independent parties.

UOL, chaired by Singaporean businessman Wee Cho Yaw, acquired the five-star Hilton hotel from New York-listed Host Hotels & Resorts and infrastructure investor Plenary Group.

The deal was negotiated by Jones Lang LaSalle Hotels Australasia chief executive Craig Collins with the purchase to be funded via a combination of cash and debt. Jones Lang LaSalle Hotels originally listed the hotel in August, 2015 with price expectations of more than $250m.

In a statement to the Singapore stock exchange, UOL said the acquisition would allow the group to enhance the operating efficiency of its current Australian hotels, through economies of scale and greater brand awareness of Pan Pacific and Parkroyal.

Plenary controlled 25 per cent of the hotel with Host Hotels owning 75 per cent, which it acquired for $137m in 2011.

Completion of the sale is expected to occur on May 31, with UOL already paying a 7.5 per cent deposit equating to $17.25m.

A 99-year leasehold over the 30,688sq m property runs until 2108.