Newcomer seizes chance to stamp its presence in
Australia’s hotel investment and asset management market.
INTERNATIONAL
REPORT – New kid on the block Ark Capital Partners is further rolling up its
sleeves to stamp its presence as a rapidly growing player in Australia/New
Zealand (ANZ) following Regal Partners’ recent acquisition of a 50% stake in
the Sydney-based firm.
On its own, Ark, co-founded in 2021 by industry experts Rahul Parrab and Mark
Bullock, already deployed more than A$350 million ($226 million) in sourcing,
securing and repositioning for its investors premium hotels, including the
Melbourne Place Hotel (now Hyde Melbourne) and Hotel X Brisbane. With Regal, it
expects to start scaling the business, said the co-founders in an interview
with Hotel Investment Today.
Regal is an ASX-listed alternative investment manager with about A$16.5 billion
funds under management at the end of March. Along with the A$3 million
acquisition of Ark, Regal acquired the 170-suite freehold Mayfair Hotel
Adelaide for A$75 million. The property serves as seed asset for the newly established
Regal Partners Australian Hotel Opportunities strategy.
Instead of being in partnership with a single capital source, we’re now partnered with a group that has A$17 billion in AUM and offers access to capital with different investment appetites and opportunities.
Mark Bullock
Parrab, Ark’s CEO, sees Regal bringing to Ark “an ecosystem that strengthens
our approach and our infrastructure, that provides us with greater access to
resources, and that gives us a wider view of other investments, such as, what
are investors looking at as alternatives to what we’re proposing? How are we
accessing a wider group of investors who may already, or may not be, in hotels
but for whom it could be an interesting asset class?”
Bullock, Ark’s head of acquisitions and asset management, added, “We now have a
range of capital options through this partnership. Our investments to-date have
been with capital partners, families, local developers. Instead of being in
partnership with a single capital source, we’re now partnered with a group that
has A$17 billion in AUM and offers access to capital with different investment
appetites and opportunities.”
Regal’s acquisition of private credit platform Merricks Capital for A$235
million last year also provides Ark with direct access to such funding, which typically
enables quicker, larger and more creative property debt solutions.
Merricks, in fact, opened the doors to Regal’s entry into Ark. It was the
company that stepped in when the developer of the Melbourne Place Hotel
defaulted on payment in 2022, and subsequently sold the property earlier this
year. On the buy side were Ark, Pioneer Wealth Group and Lead Global.
“Adrian Redlich [CIO at Merricks and Regal’s CIO of income strategies] came to
us and said he liked how we conducted ourselves and got the deal done. It was a
difficult transaction involving intense negotiation,” Bullock said. And that’s
how Regal, which intends to further broaden its alternative investment
offerings, came knocking.
According to reports, Regal’s shares have retreated since the start of 2025 due
to volatility in some of its focus areas such as biotech. That might be a
driver for its diversification into hotel investment, especially when the
Australian hotel market is positive.
Being deliberate and discipline does not mean being slow. We absolutely want to be more aggressive, more opportunistic, but we’re not cowboys. We’re focused on acquiring further assets in a structured manner and create a portfolio for our investors that will allow them a diversified investment in hotels across Australia and New Zealand.
Rahul Parrab
Regal CEO Brendan O’Conner and Merricks’ Redlich sit on the board of Ark. When
asked about potential downsides or risks from the acquisition, such as loss of
autonomy, cultural clashes and mission drift, Parrab said, “The intent [of both
parties] is for Ark to continue to grow as an independent business, benefiting
from the Regal ecosystem while retaining a high degree of autonomy. Having said
that, there will be appropriate checks and balances in place, since we will be
working with investors from both Regal and Ark.
“We’re in early stages, but it feels right. The right balance is key for us,
otherwise we would not have embarked on this partnership. I don’t want to speak
for Regal but I think if they wanted a big control, they would look for a
different structure as well.”
New roadmap, pipeline
As with next chapters, there will be a new roadmap and pipeline.
“Essentially what we’re looking at is how do we accelerate growth in a
deliberate and discipline manner,” Parrab said. “Being deliberate and
discipline does not mean being slow. We absolutely want to be more aggressive,
more opportunistic, but we’re not cowboys. We’re focused on acquiring further
assets in a structured manner and create a portfolio for our investors that
will allow them a diversified investment in hotels across Australia and New
Zealand. We have clarity around what those hotels look like and where are they
located.
“We’ve built our ecosystem; we bring a team with really strong expertise; we
have the right infrastructure around us, everything from reporting to
governance to delivery. And now it’s really about accelerating that process.”
Meanwhile, the completion of Mayfair Hotel Adelaide acquisition this month is
at the forefront of the co-founders’ mind. When asked about plans for the
hotel, Bullock said, “It was a beautiful asset, converted from an office
building in 2015. We see the opportunity to revitalize the asset and unlock its
value through a strategic capex program [involving F&B, retail and design].
There will be a rebranding – a lot of operators are interested to get hold of
it.”
Added Parrab, “It’s the best located hotel in Adelaide. It’s lost its magic. We’re
bringing the magic back and this will be Adelaide's leading lifestye hotel.”
Ark’s other current projects, which include a value creation strategy for the
Hotel X Brisbane, a conversion of a hotel in Perth CBD to Hyde Park, and a
redevelopment (Batman’s Hill on Collins, Melbourne), target an IRR of around
15% to 20%. The company expects the IRR of Mayfair Hotel to be consistent with
that range.