THE SALE of the Ramada Melbourne Hotel by Asia Pacific Hotels to Property Funds Australia Limited, was assisted by Blake Dawson Waldron, advising the vendor, and Baker & McKenzie led by Caroline Ho advising the buyer.
John Stawyskyj who led Blakes’ team on the transaction, said the transaction had involved some complexities that required a high level of team work. The 182-room Ramada is a four-star hotel in the Melbourne CBD. Those complexities arose from the fact that the purchaser was a listed property trust, which necessitated the placement of a hotel lease over the hotel the day before completion of the deal, for GST going concern requirements and for stamp duty and tax structuring purposes.
“Essentially the hotel was owner-operated under a franchise agreement. The purchaser, being a listed property trust, is not able to have operating businesses within the trust.” Putting a lease in place preserved the tax status of the trust. However, the intention of the vendor to retain the penthouse suite of the hotel, under the terms of a 200-year residential lease, meant that after completion, that lease had to be partially surrendered and a new lease granted.
Stawyskyj said this made the negotiations more complex and added to the suite of contract documents. “Our client always selling the hotel on the basis that it would retain ownership of the penthouse suite, but it was intended that the hotel would be stratum sub-divided to create separate strata for that apartment.”
However, time restraints meant those provisions could not be put in place. Asia Pacific Hotels accepted the 200-year lease as the equivalent of a freehold interest in the stratum. Stawyskyj said the last two years had been exceptionally buoyant for the hotel property market, with interest from local institutional investors and listed property funds looking to get into the sector and diversify their property portfolios.
He was assisted on the transaction by Karen Donner and Lindy Randall as well as Stephen Woodbury on employment matters.