By Vanessa Cavasinni, editor Australian Hotelier
In the space of a few days, two ALH-leased hotels in the greater Melbourne area have been placed on the market.
The freehold of the Berwick Inn Hotel was the first to be placed on the market, the first divestment to be made by ASX-list ALE Property Group (ASX: LEP), since selling 17 venues in 2009 and 2010. The two-storey venue is currently leased to ALH Group until 2028, with another four 10-year options.
Berwick Inn Hotel is located on a 4,166sqm site and comprises a bar, bistro, beer garden and gaming facilities as well as a large 50 space on-grade carpark, within the retail core of Berwick. The south-eastern suburb is centred in the City of Casey, which is the third fastest growing municipality of Melbourne.
CBRE agents Daniel Dragicevich, Scott Callow and Justin Dowers have been appointed to sell the property via a tender process. Dragicevich expects fierce competition from across Australia for this rare opportunity.
“Typically, hotels with the blue chip tenant covenant of ALH trade at between 100-150 basis points sharper than those with private tenants. ALH leased properties have actually been in very short supply in recent times, so a keenly fought sales campaign is expected.”
Over the weekend, it was announced that the freehold of the Royal Hotel in Sunbury, would also be sold. ALH has a 51-year lease – inclusive of options – on the hotel. JLL Hotels & Hospitality have been appointed to sell the freehold via a tender process.
Royal Hotel has 31 EGMs and a current net rental of circa $367,000 per annum on a triple net lease with built in CPI increases and a market rent review in 2018 that includes a cap and collar of up to 10 per cent. The hotel occupies a 1,940sqm corner site in the centre of Sunbury and is only 100 metres from the train station, offering outstanding landbanking opportunities.
“While investors will enjoy the strength of an ALH covenant and 51 year lease term, the asset enjoys substantial long-term landbanking qualities in an explosive growth corridor. With the population expected to grow by 124 per cent to 85,288 by 2041, the area is booming and Sunbury will be the major commercial centre for five outer suburbs with potential for a further 23,000+ housing lots. Evident of this strong outlook is the recent sale of KFC Sunbury on a 3.6 per cent yield,” states JLL’s Alex Richardson.
As with the Berwick Inn, the Royal Hotel is expected to garner considerable interest.