Entrepreneur hotelier Bobby Zagame has put to market three freeholds – all leased to investor-favourite Australian Leisure & Hospitality (ALH).
Zagame operates a portfolio of six pubs in Victoria and has various other interests including freehold investments in Queensland and Victoria – mostly leased to ALH.
The Seaford Hotel and Royal Hotel in Melbourne suburbs of Seaford and Fern Tree Gully are both Top-100 gaming venues on high-profile corner sites. The Kondari Hotel in Queensland’s Urangan sits on a site of approximately 80,000 square metres just 500m from Hervey Bay.
Together the assets could coax $90 million from the highly competitive ALH-grade asset class, as listed companies and international investors continue to fight over the blue-chip-tenanted property, which regularly brings yields north of six per cent.
“The ALH sale and leaseback portfolio deal of 54 venues last year to Charter Hall was headline-grabbing, and CBRE’s recent sale of two assets in Townsville is evidence of further traction in this market segment,” said CBRE Hotels’ national director, Daniel Dragicevich.
“The ever-increasing market consolidation offerings of these asset types are becoming rare, and will be hotly contested when analysed in the context of the current interest rate climate.”
Surging developer interest around the country is certainly a potential influence in the sales, particularly for the Kondari, given its enormous block and proximity to tourist-centric Hervey Bay.
“As well as the undeniable quality of the tenant each asset is underpinned by considerable underlying property, valuable gaming performance profile and very strong business fundamentals,” added Steve Cropley of Cropley Commercial.
The international EOI campaign for the three hotels is being steered by CBRE Victoria’s senior director, Mark Wizel.
“Single tenant properties that are leased to leading ASX-listed companies such as that of Woolworths are in the highest demand from buyers in well over 30 years,” said Wizel.
“Buyers believe in the Woolworths covenant, they understand the strength of them as an operator, and have great confidence in the year-on-year performance of a brand such as Woolworths.”
Bobby Zagame has been a media favourite since 1985, when he was touted as Victoria’s “youngest hotel licensee”. He holds commercial property interests beyond his hotel portfolio, as well as a growing collection of car dealerships in Melbourne.