Brisbane, 21 February 2013 – The Redcape Hotel Group is moving to sell a portfolio of nine Queensland hotels and stand-alone Liquorland bottle shops as market conditions in the investment sector continue to strengthen.
CBRE Hotels in conjunction with Burgess Rawson are the exclusive selling agents for the Redcape owned properties, with the sale program targeted to divest over $20m worth of assets.
All but one of the properties is backed by long term leases to Liqourland Queensland, a wholly owned subsidiary of supermarket giant Coles.
The sale follows the highly successful 2009-2010 sales process of 17 ALE owned hotels (all leased to the Woolworths backed ALH group), which were sold under the hammer for a combined $107 million at yields as low at 5%.
The Redcape assets are to be offered individually at auction at Crown Casino, Melbourne on Wednesday 27th March, 2013. The campaign will be steered by CBRE Hotels Director Joel Fisher and Billy Holderhead of Burgess Rawson.
Mr Fisher said the strength of the Coles tenancy covenant combined with the improving sentiment in the hotel investment sector was expected to underpin significant interest in the sales campaign.
“Coles is Australia’s second largest hotel operator with around 100 hotel venues across the country,” Mr Fisher said.
“Given the security of the lease covenant we’re expecting strong interest from passive investors, not just from Queensland but from right across the country, with all of the properties offering long lease terms and guaranteed future rental growth, well above inflation.”
The individual hotel and bottle shop assets vary in value between $650,000 and $6 million with the three Liquorland bottleshops each expected to sell for under $1 million.
All are backed by initial long term leases (most of which commenced in 2006) with options. Mr Fisher said the lease terms included very favourable rent increases of 4% annually and all properties boasted good underlying property values.
Three of the leading assets in the portfolio are the Coomera Lodge Hotel and Liquorland on the Gold Coast, the Mansfield Hotel and First Choice Liquor Barn in Townsville and the Palm Cove Tavern in Palm Cove.
Mr Fisher said Townsville’s Mansfield Hotel and First Choice Liquor Superstore was expected to attract particularly strong investor interest. The landmark property occupies a prime 6,075 sqm site - one of the largest hotel sites in Townsville.
The Mansfield site is located on the western edge of the Townsville CBD. The current rental income for the site is $347,963 per annum.
Also up for auction are two Atherton Tablelands hotels, those being the Ant Hill Hotel at Mareeba and the Carrington Hotel at Atherton (leased to the Hedz Hotel Group), as well as the Commonwealth Hotel at Innisfail south of Cairns.
The three stand-alone Liquorland bottleshops are all located in and around Cairns -Liquorland Woree, Liquorland Southside at Woree and Liqorland Coastwatchers at Trinity Beach.
Mr Holderhead added; “The long term leases and the blue chip tenancy covenants set these assets apart from other recent hotel offerings, with the opportunity to purchase a long term cash flow with fixed increases of 4% per annum, backed by one of Australia’s largest companies is not often seen in the investment market.”
“All nine are long established and successful businesses, which are certain to attract significant buyer interest from passive investors. There is a flight to quality in the current market and we are fielding strong demand for assets in this price range of $1m - $6m which offer highly secure income streams and quality lease covenants such as these,” Mr Holderhead said.
While the auction will be staged in Melbourne, Mr Fisher said live interstate bidding would be available at Jupiters Casino in Townsville and CBRE’s CBD offices in Sydney and Brisbane.
“In the current low interest rate environment we are fielding strong investor demand for well positioned commercial properties with strong investment fundamentals. In this instance, investors are being given the opportunity to buy well established, highly successful hotels and bottle shops which provide long term, fixed rental cash flows above inflation backed by Australia’s 2nd largest hotel operator,” Mr Fisher said.
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