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Report: Starwood quits race for hotel portion of Dexus' A$1B Sydney project

Starwood Capital LLC withdrew from the competition for the A$400 million hotel component of a A$1 billion mixed-use development in Sydney that is being sold by Dexus and the Perron Group after deeming that the asset is "too expensive," The Australian reported, citing unnamed sources.

The American investment house's retreat left iProsperity Group Pty. Ltd. and another unnamed party to compete for the hotel portion of the mixed-use project being built at 201 Elizabeth St. The Sydney-based investment company is pushing to place AccorHotels' Fairmont brand in the hotel-and-apartment project, while its unnamed competitor is lobbying for a Grand Hyatt-branded hotel, according to the publication.

The selling partners appointed Savills PLC to oversee the divestment of the hotel. The agent declined to comment on the sale process, the March 25 report added.

Dexus is planning to construct a 350-room luxury hotel, retail and an apartment block on the 201 Elizabeth St. site, with completion expected by 2024. The office real estate investment trust, according to the paper, tapped Knight Frank to manage a separate off-market process for the sale of a roughly 80% stake in the development as it seeks to raise additional capital from a partner, most likely from Asia.