Sydney, 17 July 2015 – The strength of Australia’s hotel market is set to be tested, with the upcoming sale of three high profile assets across Victoria and Queensland, tenanted by the Australian Leisure and Hospitality (ALH) Group.
CBRE Hotels, in conjunction with Cropley Commercial, has been appointed to sell the portfolio by way of International Expressions of Interest, comprising the Kondari Hotel in Hervey Bay, the Seaford Hotel in suburban Melbourne and the Royal Hotel in Upper Ferntree Gully, Melbourne. The portfolio is expected to generate interest circa $90 million.
These asset types have proven extremely popular with investors through all economic climates, with the secure CPI-indexed annual income stream offering the purest form of annuity return.
The two Victorian assets in Seaford and Upper Fern Tree Gully are outstanding gaming operations and sit within the top 100 in the state rankings. Both venues occupy high profile corner sites, with the Seaford Hotel also incorporating a recently built Dan Murphy’s liquor outlet.
The Kondari resort hotel in Hervey Bay is situated on approximately 80,000sqm of land across four titles just 500metres from the shores of Hervey Bay in the township of Urangan. The hotel features 35 gaming machines with approval to increase the number of machines to 42. Additionally, the asset has a dual lane drive through BWS liquor outlet and a 68 room motel onsite.
CBRE Victoria Senior Director Mark Wizel, who is steering the campaign on behalf of long-time client Bobby Zagame, stated: "Single tenant properties that are leased to leading ASX listed companies such as that of Woolworths are in the highest demand from buyers in well over 30 years. Buyers believe in the Woolworths covenant, they understand the strength of them as an operator and have great confidence in the year on year performance of a brand such as Woolworths.”
Cropley Commercial’s Steve Cropley said: “As well as the undeniable quality of the tenant, each asset is underpinned by considerable underlying property, valuable gaming performance profile and strong business fundamentals.”
CBRE Hotels Victoria Director Scott Callow added: “ALH, 75% owned by Woolworths, is the country’s largest hotel operator with over 320 venues nationwide, and is an extremely sought after covenant by institutions as well as the private investor market. We expect huge interest from both buyer profiles as well as those private high net worth individuals who have purchased similar product in the past.”
CBRE Hotels National Director Daniel Dragicevich added: “The ALH sale and leaseback portfolio deal to Charter Hall of 54 venues last year was headline grabbing and CBRE’s recent sale of two assets in Townsville is evidence of further traction in this market segment. With the ever increasing market consolidation, offerings of these asset types are becoming rare and will be hotly contested when analysed in the context of the current interest rate climate.”
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