Shakespeare Property Group Pty Ltd has signed an agreement to purchase Sydney hotel, the Woolstore 1888 by Ovolo, and expects to announce a new operator for the hotel in the coming weeks.

Built in 1888, the Darling Harbour property is the fourth oldest of 21 surviving wool stores in Sydney.

Converted to a hotel in recent years, the freehold five-level sandstone and brick building has 90 guest rooms and a 626 square metre footprint.

Shakespeare Property Group Vice President Hospitality Assets and Investments, Richad Saab, described it as a unique asset with value-add potential.

“The Woolstore 1888 is a stunning hotel asset which is in great condition, in a great location, and doesn’t require major capital expenditure for us to realise its full potential,” Saab said.

“We think there is scope to improve the asset. But we also think this property speaks for itself, as one of Sydney’s finest heritage hotels.

“The location is also attractive with Darling Harbour poised to benefit from Mirvac’s $2 billion harbourside redevelopment, and from state government infrastructure including the Pyrmont Metro train station.”

Shakespeare Property will raise equity from wholesale investors via a single-asset, close-ended unlisted property investment trust to fund the deal. The Shakespeare 1888 Trusts will target a 16% IRR and aim to provide an annual distribution commencing at 6%, increasing to 8% plus from the third year onwards.

Ovolo Hotels CEO, Dave Baswal, said the sale allows the business to focus on new APAC markets.

“We are delighted to have the future of The Woolstore 1888 by Ovolo in the capable hands of The Shakespeare Property Group, having operated this property for the better part of a decade, this sale will allow us to focus on new markets across Asia Pacific with high growth opportunities aligned to the strategic direction of the greater group whilst diversifying our portfolio,” said Baswal.

Shakespeare Property Group is part of an investment group, including Prime Value Asset Management Limited founded in 1998, and manages over AU$3 billion in equities, income securities, direct properties and alternative assets.

Through a centralised back-of-house strategic hub, Shakespeare Property Group owns and operates four hotels with a total 1,100 rooms, including the Pullman Cairns Hotel.

“The Sydney hotel market is attractive and has shown strong recovery since Covid,” said Saab.

“Revenue per available room in Sydney has reached record levels in Sydney during 2023 and is approximately 13 per cent higher than that of 2019.

“We’re also seeing rapidly growing demand in the boutique and lifestyle accommodation market, and the Woolstore 1888 is well placed to capture this growth.”