By Andrew Starke

ALE Property Group has put seven pubs in Queensland, South Australia and Victoria on the market as part of a strategic asset sales program to divest $120 million worth of assets in the next 12 months.

Up for sale at an auction next month are: Davey’s Hotel at Frankston and the Royal Hotel at Sunbury both in Victoria; The Sunnybank Hotel and Albion Hotel, both in Brisbane, and the Caloundra CBX Hotel on Queensland’s Sunshine Coast and; The Ramsgate Hotel at Henley Beach and the Enfield Hotel in Clearview, both in South Australia.

The hotels will be offered for sale individually at an auction to be staged at Melbourne’s Crown Casino on October 7, with each expected to fetch between $5 and $10 million.

All the properties have 19-year leases to the Australian Leisure & Hospitality Group (ALH), which is majority owned by Woolworths.

ALE has engaged CB Richard Ellis (CBRE) Hotels and Burgess Rawson to help sell the hotels. The auction will be steered by Joel Fisher, Scott Callow and Craig Harley of CBRE Hotels, in conjunction with Raoul Holderhead, Billy Holderhead and Pat Kelly of Burgess Rawson.

"In the current low interest rate environment we are fielding strong investor demand for well-positioned commercial properties with strong investment fundamentals," CBRE hotels director Joel Fisher said.

"In this instance, investors are being given the opportunity to buy well-established, highly successful hotels which provide long-term, CPI-indexed rental cash flows backed by Australia’s largest hotel operator."

CBRE Hotels Queensland, Craig Harley, said Brisbane’s Sunnybank Hotel was expected to attract particularly strong investor interest.

The landmark property in Brisbane’s southern suburbs occupies a 2.7 hectare site – one of the largest hotel sites in South East Queensland.

The Sunnybank site includes both a Dan Murphy’s and BWS liquor store and is regarded as one of the strongest performing gaming pubs in Queensland. The rental income is $814,952 per annum, before land tax.

Also up for sale is Brisbane’s high profile Albion Hotel and popular tourist watering hotel the Caloundra Hotel on Queensland’s Sunshine Coast.

The Albion provides net annual income of $447,345 while the Caloundra Hotel offers $430,459 (both before land tax).

“The long term leases and the blue chip tenancy covenants set these assets apart from other recent hotel offerings, with the opportunity to purchase a long term cash flow linked annually to CPI, backed by one of Australia’s largest companies is not often seen in the hotel market,” Harley said.

ALE sold five hotels in Sydney and Melbourne at auction in June which went for a combined total of $27.8 million.

CBRE said the strong buyer interest at the time had prompted ALE to announce a broader sales program to capitalise on the private investor demand for smaller value properties with long term leases to high quality tenants.

ALE’s share price was $1.96 at 2pm today (Sep 7), down from $2 seven days ago.

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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