Merricks Capital to fund $200m hotel development
8th July 2021
The private lender sees significant potential in bank-reliant New Zealand.
Private lender Merricks Capital is financing the $200 million development of a 43-storey hotel-dominated project under way on Auckland’s Albert St, as it makes a wider attack on taking market share from bank lending.
The three-year build of 51 Albert, which is about to start following the demolition of the interior of the existing building on the site, retains the heritage façade.
Once complete, the development will include a 225 room, 5-star hotel operated by InterContinental Hotels Group.
The top levels will also include 30 luxury residential apartments, while the ground floor has two retail tenancies.
Australian financier Merricks Capital’s mortgage funds target wholesale investors and institutional investors in both Australia and New Zealand and is backed by the wealthy Liberman family, holders of the second-largest distributed family fortune in Australia.
Merricks managing director of investment Andrew Torrington said that despite the obvious short-term challenges surrounding the hospitality industry, he was bullish about the long-term prospects of Auckland’s hospitality industry and the prospect of tourism returning in strength over the next three years – as well as the city’s position as a centre of commerce.
Torrington said the collapse of tourism and drop in hotel occupancy rates through the pandemic meant getting a bank to fund a hotel development had been “nigh impossible”, something the non-bank lender had been happy to take advantage of.
“We’ve probably funded, I’d say, $300m of hotels during the last 12 months, both new completion and hotels that had completed during Covid that wouldn’t get the occupancy levels.”
Torrington appreciated the development was a bit “funky” in terms of the small footprint and timing for a large-scale hotel development to kick off.