Canny landlord swoops on two floors of five-star Sofitel hotel
A Christchurch accommodation-property landlord has snapped up another slice of Queenstown’s troubled Sofitel Hotel complex.
Timeshare pioneer Graham Wilkinson, who also developed the resort’s Hotel St Moritz 11 years ago, is relieving receivers of 16 mostly unoccupied Sofitel retail spaces – for a price understood to be less than $4 million.
Wilkinson first dipped his toe into the Sofitel a year ago, buying the 82-room five-star hotel’s leasing company from original Auckland-based developer Perron.
Perron, meanwhile, had sold the freehold of the ground and first- floor retail complex to Espresso Ltd, whose sole director was Mark Bryers, co-owner of collapsed property empire Blue Chip.
Espresso went bung last October – owing, according to the receivers’ latest report, $10.1m to Westpac plus other debts to Boston Finance and Hanover Finance.
The report says Espresso fell over because most Sofitel retail spaces were vacant.
Sofitel businesses closing since the complex opened in 2005 include Hunters Leather Goods, whose owner allegedly did a runner, Indian restaurant Spicy Bites, Code bar, Bezu restaurant and Esquires coffee shop.
Other former tenants include a timeshare operator linked to the hotel and Chop Chop restaurant, whose owner, after filing for bankruptcy, estimated he’d lost $300,000.
Chop Chop’s owner was among unhappy tenants claiming Sofitel rents – in his case $100,000 a year – was a killer because foot traffic was low.
The only tenants to stick around have been Italian restaurant Fatz Cat, Browns Sotheby’s International Realty, and Sofitel’s own more recently opened spa.
Perron originally charged whopping rentals of up to $1000 per sq m for the ground floor and $500-plus per sq m for first floor tenancies.
“The rents were exceptionally high and it always made it difficult for any business to be sustainable,” new owner Wilkinson says.
Buying both Sofitel floors for a fraction of what Espresso paid means rentals can be more realistic, he adds. Wilkinson believes buying the floors en masse – in a deal brokered by Colliers International – will allow for complementary businesses to set up, which wouldn’t have happened if the retail spaces had been sold individually.
He intends spending a few million dollars renovating both floors in the second quarter of next year, using leading New Zealand hospitality interior designer Stewart Harris.
Some changes will directly benefit the Sofitel hotel too – such as shifting its ground floor reception into a grand lobby area towards the front of the building and putting in a first-floor gym.
Wilkinson will also open a French-themed, ground-floor cafe.
“The Sofitel [hotel] has performed pretty robustly but I think it can probably perform and get even higher rates if it has the necessary product, and that includes enhancing the common areas.
“The hotel itself lacks the grandness and adequacy of public spaces that a five-star hotel should have. People have always commented on how hard it is to find the reception [desk].”
Other first-floor areas will be converted to office space, though Wilkinson admits there’s “a bit of a surplus” in Queenstown’s CBD.
“It’s a good location, nice and airy, with a nice outlook and balconies and a large amount of toilet facilities so tenants will not have to rent additional space for their ablution facilities.”