Sale of ALH’s Tudor Inn has set a new high water mark for the asset class, as the first in blue chip divestments to dip below a four per cent yield.
Set on a big 4,789sqm site on a corner of the Nepean Highway in Cheltenham, 20 kilometres south-east of the Melbourne CBD, the Tudor is tenanted by listed tenant Endeavour Group, incorporating Australian Leisure & Hospitality (ALH).
Australia’s biggest publican is at the pub on a seven-year lease, with three further options, paying the landlord net income of $592,855 per annum.
The on-market public campaign generated eight offers to purchase – including five by international parties, understood to be drawn to the long-term security of a large activity centre landholding with income.
The highly competitive public tender process found sale price of $15.6 million, representing a record-breaking yield for an ALH-tenanted asset of 3.79 per cent.
This was 32 per cent above the 30 June book value of $11.85 million.
Competition also furnished an unconditional outcome and 90-day settlement, with the successful purchaser confirmed to be a local private investor.
In the past five months, ALE Property Group (ASX:LEP) has divested more than $100 million of non-core properties, but none previously have reached a yield below four per cent.
The sale was negotiated by CBRE Melbourne’s Nathan Mufale, David Minty, Scott Hawthorne, JJ Heng and Mathew George.
“To generate over $100 million in offers represents the increased weight of capital currently competing for blue chip assets in Melbourne’s commercial property market,” offered Mufale.
ALH-leased freehold sales this year
Morwell Hotel, Morwell, VIC – Mar-21 – $3.06 million, 4.74 per cent
Edinburgh Castle Hotel, Kedron, QLD – Mar-21 – $7.5 million, 4.65 per cent
Kedron Park Hotel, Kedron Park, QLD – Mar-21 – $4.6 million, 4.98 per cent
Pelican Waters Tavern, Caloundra, QLD – Mar-21 – $10.8 million, 4.15 per cent
Noosa Reef Hotel, Noosa Heads, QLD – Apr-21 – $13.9 million, 4.98 per cent
Boundary Hotel, Bentleigh East, VIC – May-21 – $33 million, 4.23 per cent
Royal Exchange Hotel, Toowong, QLD – Aug-21 – $14.05 million, 4.01 per cent
Tudor Inn Hotel, Cheltenham, VIC – Aug-21 – $15.66 million, 3.79 per cent
