Two quick purchases by one of the country’s best-performing hotel property owners has set the tone for a hot year in the investment market.
After a successful IPO in 2013, Hotel Property Investments (HPI) – the freeholder spin-off of re-structured pub owner-operator Redcape – has snatched up the ALH-tenanted Magnums Airlie Beach and the Coles-tenanted (Spirit Hotels) The Wallaby on the Gold Coast.
Divested by Aussie Leisure Group (ALG), Magnums is billed as “the gateway to the Whitsundays” and enjoys near cult popularity on Main Street of the tourism mecca. They achieved $17.5 million for the pub, representing a healthy eight per cent yield.
HPI swooped on the asset, signing on the day the EOI campaign closed with Ray White Hotels. Director – Asia Pacific, Andrew Jolliffe told PubTIC that beyond the appealing ALH tenancy the strong result was spurred on by the economic resurgence of the Airle/Proserpine area, following significant recent investment from both the public and private sector.
“The development of a new and purpose-built Woolworths-anchored shopping centre a short distance from the hotel, and the continued magnetism of the area’s two world-class marina developments, means the region is underpinned by high quality infrastructure that serves to stimulate collateral investment and business activity,” said Jolliffe.
HPI signed up for The Wallaby for around $9.5 million, representing an equally attractive 7.85 per cent yield, with established rental increases.
Ray White’s Joel Fisher managed the campaign, and noted that the two sales – by different A-grade vendors but to the same purchaser – “set the tone” for a strong market heading into 2015.
“Both assets, in the highly sought after Queensland hotel market, highlight examples of where investor value was identified in the form of longer-term leases to the highest possible tenancy covenants.”
HPI has also recently done some spring cleaning to its predominantly Queensland portfolio, divesting six detached bottle shops (DBS) in Townsville and Cairns (also through Ray White), and one in regional South Australia, citing “non-core” reasoning.