Victoria’s Tudor Inn Hotel has sold on a 3.79 per cent yield which sets a new national record for an ALH Group-tenanted investment, according to CBRE which managed the sale.
Anchored by listed tenant Endeavour Group (formerly ALH), the Tudor Inn Hotel was sold for $15.66m to a local private investor with a seven-year lease and returning a net income of $592,855 per annum.
It’s the latest in a string of non-core divestments this year by ALH Group in deals that add up to more than $100m.
The sale of the Cheltenham-based hotel followed a highly competitive public tender process, according to CBRE’s Nathan Mufale, David Minty, Scott Hawthorne and JJ Heng who negotiated the sale.
The on-market campaign generated a total of eight offers, with the process resulting in an unconditional sale and 90-day settlement period.
“The sale price of $15.66m is 32 per cent above book value for the asset,” Mufale said. “To generate over $100 million in offers represents the increased weight of capital currently competing for blue chip assets in Melbourne’s commercial property market.”
According to Heng, larger landholdings with income are highly sought after by buyers with long-term purchasing strategies. “The sale of the Tudor Inn Hotel follows the divestment of several other ALH tenanted properties this year, with this being the first to achieve a sub-4 per cent yield,” he said.
Last week the Royal Exchange Hotel in Brisbane, which is also operated by Endeavour Group, was sold in an online auction for $14.05m and at a yield of four per cent.
Mathew George, CBRE’s Victorian director, Hotels, told Australian Hotelier the strong result came down to a combination of things including a blue-chip tenant, a good-sized block of land, more competition due to the return offshore buyers, and the low cost of debt.
“People are taking as much comfort in these triple-A leased properties as they would a government bond, and getting a much better return,” he said. “People are willing to lock their money away with these blue-chip tenants.”