The freehold interest of ALH’s Royal Hotel Sunbury has been sold on a tight return between two pub families.
The Royal enjoys a prominent corner in the heart of Sunbury, around 45 minutes’ north-west of Melbourne’s CBD, in a significant growth corridor.
The Woolworths-Mathieson controlled ALH Group is 15 years into the original 25-year lease, with four ten-year options remaining. The arrangement sees the Group paying $367k rent, with a major review in November likely to bring an increase as high as ten per cent.
The pub was formerly on the books for the ASX-listed ALE, before a string of divestments in 2009 saw it move into the hands of a well-known Melbourne pub family, who recently put it to market with JLL Hotels’ Mat George and Alex Richardson.
It holds the same triple-net lease seen across the ALE portfolio of 86 ALH-tenanted freeholds, which collectively saw a recent revaluation to $1.134 billion, at an average cap rate of 4.98 per cent.
The buyer is a private family that have recently sold their long-held pub in NSW, and want a solid investment for retirement. The sale now, for just north of $7 million, represents a tight return of 5.17 per cent for the blue-chip asset.
“This deal represents the sharpest yield for an ALH tenanted investment hotel in over nine years,” says Mathew George. “Not since ALE divested the Sunnybank Hotel in 2009 has a premium been paid at close to five per cent.”