The recently renovated Grand Hotel Cairns and neighbouring development site has been sold by Oxford Hotels to Brisbane-based Stronghold Investment Management.
The pub has 35 gaming machines, a drive-thru bottle shop and is positioned on over an acre of land with development potential in the Cairns CBD.
Oxford Hotels will continue to operate the pub as a lessee under an initial 10-year lease agreement. Its managing director Jaz Mooney said the group was attracted to the pub’s prime location and significant potential when it acquired it.
“We completed the renovation nearly two years ago and the community embraced it immediately,” Mooney said. “However, I am not a developer, so it was never a long-term vision of mine to hold the land indefinitely.
“I am delighted that I can stay on as the lessee and that Stronghold has seen the opportunity not only for the short and medium-term but in the long term for this site prime Cairns CBD site.”
Stronghold director Steve de Nys said, “We are delighted to finalise this acquisition on behalf of our investors in what has been a challenging transactional environment.
“In addition to the established hotel, the property includes circa 3,100sqm of land with development potential up to 14 levels. We look forward to working with local stakeholders and our tenant to maximise this potential over the medium term.”
CBRE Hotels’ national pubs director Paul Fraser negotiated the sale of the pub and two adjoining lots on behalf of the owner. The sale includes a head lease over the entire site and six adjoining retail shops.
“Cairns continues to be one of a handful of Queensland regional centres where the appetite for landmark sites remains incredibly strong,” Fraser said.
“The opportunity for the owner to sell the freehold interest in the asset was undeniable in a market chasing annuity of income and long WALEs.
“Ultimately, the way we structured the lease meant that the owner was able to ensure continued high cash flow and profits year-on-year whilst also realising a high exit price which will enable Oxford to redeploy capital into other projects.”
Another strong yield
In another sale managed by CBRE, a private investor has purchased the freehold interest of the Customs House Hotel in Williamstown, Melbourne, for $5.85m after more than two decades of ownership.
Having transacted with an existing lease to an experienced hotel operator, the sale represents a yield of 3.84 per cent based on the net annual income of $225,000, according to CBRE.
Customs House Hotel sits within a heritage precinct, is one of Williamstown’s largest function venues.
CBRE’s Scott Callow, David Minty and JJ Heng, in conjunction with James Gregson of Gregson Commercial, managed the sale. “The demand for well-located hotel investments has never been stronger, and we’re seeing record yields in the current market,” he said.
The sale of the Customs House Hotel follows the recent transaction of the Tudor Inn in Cheltenham, also managed by CBRE, which delivered a record yield of 3.79 per cent.