Melbourne, 27 March 2013 –The Redcape Hotel Group has realised circa $10 million from the auction sale of six Coles-leased hotels and stand-alone Liquorland bottle shops in Queensland as market conditions in the investment sector continue to strengthen.
CBRE Hotels and Burgess Rawson steered today’s auction for the Redcape properties, all of which are backed by long team leases to Liquorland Queensland, a wholly owned subsidiary of supermarket giant Coles.
The Redcape assets were offered individually at auction at Crown Casino, Melbourne following a sales campaign steered by CBRE Hotels Director Joel Fisher and Billy Holderhead of Burgess Rawson.Live interstate bidding was facilitated via rooms at Jupiters Casino in Townsville and CBRE’s CBD offices in Sydney and Brisbane.
Six of the seven properties offered were sold under the hammer – with all sold at prices either at or above book value at yields as low as 7.45%.
Mr Fisher said three of the buyers had come from the Melbourne bidding room with the other three buyers from the Sydney bidding room. However, there was active bidding from all locations.
He added that the strength of the Coles tenancy covenant combined with the improving sentiment in the hotel investment sector had underpinned 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 fielded 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.”
All of the properties 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.
One of the leading assets in the portfolio was the Mansfield Hotel and First Choice Liquor in Townsville, which sold for just over $4 million at a yield of around 8.50%.
Also sold was the Ant Hill Hotel and Liquorland at Mareeba in the Atherton Tablelands ($1.75 million at 4% above book value) as well as the Commonwealth Hotel and Liquorland at Innisfail south of Cairns for $1.75 million.
The three bottleshops are all located in and around Cairns -Liquorland Woree (just over $600,000), Liquorland Southside at Woree ($620,000 – 4% above book value) and Liqorland Coastwatchers at Trinity Beach ($890,000).
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, not often seen in the investment market.”
“In this instance, investors were 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 2ndlargest hotel operator.
“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.”
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2012 revenue). The Company has approximately 37,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website atwww.cbre.com.au.