Mfs Buys Stockland Hotel Chain

Sydney Morning Herald

Tuesday December 5, 2006

Carolyn Cummins Commercial Property Editor

DIVERSIFIED Southport property group MFS has paid Stockland $114 million for the Saville Hotel management business, bolstering its expanding hotel operations.

Stockland put the chain up for sale in August, saying it considered the business a non-core asset.

Under the Saville banner are 11 apartment-style hotels with 1700 rooms under lease agreements and management contracts across the country.

In a statement, Stockland managing director Matthew Quinn said a number of parties had expressed interest in the chain, including foreign as well as Australian operators.

MFS is no stranger to the serviced apartment and hotel business. It is in the throes of taking over the travel and hotel manager S8, of which it already owns 53 per cent.

When the S8 and Saville deals have been finalised, MFS will operate close to 19,000 hotel rooms in Australia.

MFS's managing director, Phil Adams, said the new Saville assets will be consolidated into the group's existing Stella Resorts operation - which manages business under the brands of the Peppers, BreakFree, Bale, Pacific International and Mantra.

"This acquisition bolsters the Stella Resorts Group's position in the important corporate accommodation market," Mr Adams said.

Mr Quinn said the proceeds from the sale would be "recycled" into Stockland's balance sheet. He said MFS and Stockland had also agreed to work together on other developments in the hotel and leisure industries.

In a note to clients, Goldman Sach JBWere said the deal was expected and the cash would be used by Stockland to help expand its investment and fund management divisions.

Mr Quinn said the group would now look at buying overseas assets, mainly in Europe.

Yesterday's deal is one of many for MFS this year as it pushes to become a major force in the fund management and property industry.

Last month it paid $87 million for a 49.4 per cent stake in the unlisted management arm of Sunland Group, which will give MFS increased exposure to the lucrative Gold Coast commercial, retail and residential property market.

MFS generates its fees through managing listed vehicles including MFS Living and Leisure Trust, as well as managing and/or owning the Sheraton Mirage assets in Port Douglas and the BreakFree, Peppers, TLC and Outrigger hotel operations.

© 2006 Sydney Morning Herald

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