By Andrew Starke
The ALE Property Group will create auction history next week when it puts seven hotels under the hammer using sophisticated audio visual technology to connect auction rooms across four states.
CBRE Hotels and Burgess Rawson are steering the sale campaign for the hotel freeholds located throughout Melbourne, Adelaide, Brisbane and the Sunshine Coast.
To facilitate the cross border properties being auctioned, ALE will offer the Queensland, Victorian and South Australian properties at the same time, using an audio visual link up facilitated by Melbourne-based IT firm Webtron.
The auction will be conducted on October 7 at Melbourne’s Crown Casino, with live video feeds from separate rooms in Brisbane, Adelaide and Sydney.
Burgess Rawson Director Raoul Holderhead said audio visual technology had never before been used on such a scale.
“Should any remote bidders be successful at the auction, we understand that it will be the first time assets of this magnitude will change hands using this technology,” Holderhead said.
CBRE Hotels Director Joel Fisher said the process had been instituted following the buyer response to previous ALE auctions, at which Sydney and Melbourne hotels had been offered on separate days at auctions in each city.
At the time, buyers who had missed out in one state had then turned their attention to properties on offer in the other location.
Fisher said the planned link up for next week’s auction had attracted a strong buyer response, with multiple parties expected in each room.
“We expect at least 20-odd genuine bidders in our Brisbane facility alone, looking to bid on assets across the three states,” Fisher said.
The seven hotels up for sale are located in Queensland, South Australia and Victoria. All are landmark properties leased to Australian Leisure & Hospitality Group (ALH), which is 75% owned by Woolworths Limited.
Fisher said the centrepiece of the portfolio was the iconic CBX Hotel at Caloundra on Queensland’s Sunshine Coast.
Built in 2004, the hotel occupies a prime, 1940 square metres site just 200 metres from the beach on Bulcock Street and offers an annual rental income of $419,000 per annum.
The other hotels up for auction 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 Ramsgate Hotel at Henley Beach and the Enfield Hotel in Clearview, both in South Australia.
Expected prices for the individual hotels range from $4m to $9m.
All seven properties are being sold with 19 years remaining on leases to ALH, with options to renew for a further four, 10-year terms.
The leases are Triple Net (excluding QLD land tax) and include yearly CPI rent adjustments and a collared market rent review in 2018, offering the incoming owner a secure and unusually long term revenue stream.
Fisher said the long term leases and the blue chip tenancy covenants set these assets apart from other recent hotel offerings.
“In the current low interest rate environment we are fielding strong investor demand for well positioned commercial properties with strong investment fundamentals,” he 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.”
More information about the hotels being offered can be viewed by clicking here.