Five big footprint pubs have burst onto the market, as Queensland’s favourable conditions and new developer laws set in.
Pub operators Drinx and AT Hotels are divesting pubs in South-East Queensland boasting a massive 37,600 square metres between them, less than three months since the State introduced its new laws for developers.
Operating five venues in NSW and Queensland, hotel operator Drinx is putting its entire portfolio in the Northern State on the market, listing Brisbane landmark the Grand Central Hotel, Redcliffe’s magnificent Belvedere Hotel, and the Full Moon Hotel, in Shorncliffe.
The AT Hotel Group is parting with the Stafford Tavern in Brisbane, and the award-winning gaming-centric Sugarlands Tavern, in Bundaberg, which it has operated for a collective 20 years. The hotels are located on 9993 and 14,160 square metre blocks (respectively).
All five pubs are being marketed by JLL Hotels’ Senior Vice President – Investment Sales in Queensland, Paul Fraser, and National Director – Pub Investment Sales, John Musca, who point to multiple factors, including improved market conditions and investor confidence as the “key reasons” behind the sales.
Speaking to PubTIC, Fraser reiterated the opportunities for developers, land bankers and innovative operators.
“Whilst the Belvedere, Full Moon, Sugarlands and Stafford Tavern each present different operating models, with the Drinx assets very food and beverage focused and the AT Hotels very gaming-centric, we believe these assets to be extremely attractive to the market – providing huge cashflow-positive businesses and further opportunities to develop the land to optimise it.
“The Grand Central is a leasehold, and we believe an astute operator will look at this asset as a real opportunity to maximise the current operation and enjoy a high-returning cashflow business for decades to come.”
Introduced last June, the Land Sales and Other Legislation Amendment Bill 2014 took effect on 1 December, 2014, and amended three Acts governing real estate transactions.
The Bill was designed to reduce ‘red tape in the sale and purchase of property, and was touted as of particular significance to developers, simplifying the process and eliminating the requirement for a licence.
Musca says Queensland saw $250 million in pub sales last year, and investment conditions are favourable with banks lending up to 70 per cent on freehold properties and 55 per cent on leaseholds and 5-year fixed rates below five per cent and falling.
“Queensland is starting to show strong signs of a resurgence moving into 2015. Queensland’s positive outlook has been brought on by a number of factors including bank lending criteria, record low interest rates and relaxation of state gaming legislation.
“The current climate makes for an obvious migration for New South Wales’ hotel operators to Queensland, especially those looking at increasing their scale in the market, with Queensland showing stronger value.”
Fraser indicated the case for “gaming-centric” operations, given the state of the State’s authority costs.
“Gaming authority pricing has risen sharply in the South-East Queensland sector from a low of $67,152 in November 2012 to a high of $131,341 in November 2014 per authority, showing the demand from the market is back.
“The gaming authority pricing in Queensland is often used as a barometer as to how the sector is travelling. Confidence in this revenue stream has slowly been restored after years of uncertainty.”