ALH’s famed Royal Exchange Hotel in Brisbane’s Toowong has come up for sale, offering investors a trophy asset on an A-grade lease for the next 47 years.
Occupying 2,453sqm in the river suburb of Toowong, the Royal is known to be one of the State’s most famous beer gardens, atop its multiple bars, gaming lounge with 40 machines, on-site BWS and 27 parking spaces. It also holds a further three detached bottleshops, operated by Endeavour, and future development potential.
The pub operation is on long-term triple net lease to the newly-listed Endeavour Group (ASX:EDV) and subsidiary Australian Leisure & Hospitality (ALH). The 25-year lease runs until 2028, with four 10-year options and current net income of $562,715.
“The Royal Exchange Hotel is a highly regarded suburban hotel operation, and the stability offered by having the nation’s largest hoteliers as its listed tenant is a compelling proposition,” suggests HTL Property’s Glenn Price.
The national pub market recently set a record, racking up $1.5bn in sales for FY21. Included in this were the divestment of four assets owned by ALH landlord ALE (ASX:LEP) in Queensland and Victoria, for a blended yield of 4.4 per cent.
ALE now offers up the Royal Exchange Hotel, as it reports valuations up 7.32 per cent on its Queensland assets, with ‘passing adopted yield’ of 4.38 per cent. ALE still hold the title on 82 pubs – all leased to ALH.
Freehold of the Royal Exchange Hotel will similarly be sold at auction, managed by Burgess Rawson and HTL Property, taking place at Melbourne’s Crown Casino and other virtual locations on Wednesday, 4 August.
