MFS is putting the finishing touches to the Stella Resorts Group before a spin off listing by buying out the Australian and New Zealand operations of Hawaii based hotel and resort operator Outriggers for $120 million.
Outrigger currently operates 11 resorts in Australia and two in New Zealand with a further six scheduled to open over the next three years. The transaction does include the Outrigger brands and as such each resort will be rebranded into the Stella Resorts Group.
The sale is a premature end for Outriggers strategic growth plans in Australian and New Zealand. Not long ago in November last year, Outrigger’s senior vice president of operations Dave Lawrence said the company was looking to increase its foothold in the CBD hotel market.
Yesterday, Lawrence said the company will use the proceeds to acquire other assets and to continue to position Outrigger Enterprises Group as a regional leader in hospitality, retail and developments.
Outrigger Enterprises owns commercial office space on Queensland’s Gold Coast and will continue to operate from its regional headquarters at Surfers Paradise.
MFS Tourism chief executive Rolf Krecklenberg said the acquisition is a significant boost to the assets of the Stella Resorts Group with approximately 2000 rooms with a pipeline of approximately 1000 more to come over the next three years.
Stella currently has approximately 5200 rooms under management.
With this acquisition MFS is on track to create a tourism-focussed investment vehicle with assets valued at up to approximately $600 million. MFS plans to list Stella Resorts Group by no later than the end of the third quarter of this financial year.
The creation of this vehicle will increase MFS’ assets under fee paying management by at least $500 million and will complete the transformation of MFS into a pure investment bank and financial services group.
“We are excited by this acquisition which when coupled with our acquisition of Tourism, Hotels and Leisure Limited and its associated assets will see our rooms under management reach approximately 9100 by March 2007,” Krecklenberg said. “We will be working closely with all stakeholders to ensure a smooth transition and look forward to welcoming them to the Stella
Resorts Group.”
The acquisition will be funded from MFS’ cash resources and existing debt facilities. All parties are aiming for settlement to be concluded before the end of 2006.
The Stella Resorts Group manages and markets more than 60 branded properties throughout Australia and New Zealand including Balé Resorts, Peppers Retreats, Resorts and Hotels, Mantra Hotels, Resorts and Apartments, BreakFree Hotels, Resorts and Apartments and Ambia Villas and Apartments.
By Adam Parsons
