Zagame Corporation has sold its second Melbourne pub in as many months, with the venue’s freehold going to a new entrant to the sector who is based interstate.
The Boronia Hotel in Melbourne’s eastern suburbs sold for $24m, a deal that follows hot on the heels of last month’s $28m sale of the Edwardes Lake Hotel in Reservoir in the city’s northern suburbs to ASX-listed Hotel Property Investments (HPI).
Both venues are leased to IPR Hotels, along with two other Zagame-owned hotels in Berwick and Ballarat, with the latter two venue’s freeholds also expected to be sold in the coming months.
The sale of the Boronia Hotel by Zagame Corporation is the latest in a line of divestments by the Zagame family, whose pub ownership began in 1971 led by Victor Zagame who passed away four years ago. His sons, Victor Jnr and Robert Anthony, who took over the business, reportedly signalled their intentions to exit the gaming sector in 2018.
The Boronia Hotel is a large-scale investment hotel and it gained interest from both private and institutional investors with numerous offers received from parties nationwide, according to JLL Hotels which brokered the deal.
The swift, unconditional actions of the successful purchaser ultimately secured the asset prior to EOI close, JLL said, and realised an initial yield of five per cent.
The pub has a 60-year, triple net lease with the venue operating 80 gaming machines and a commencing net annual income of $1.2m, with the property commanding a high-profile corner site of 7,053sqm in the heart of Boronia’s retail precinct.
The hotel industry is currently experiencing the strongest period of transactional activity in two decades, according to JLL.
In Victoria alone, JLL says it has transacted around $225m hotel assets so far in the 2021 calendar year.
“The sale highlights the esteem investors hold in hotels as an asset class, delivering an IRR exceeding any other form of retail property due to the millions of dollars of underlying perpetual goodwill value that exists in each tenancy, the future restabling arbitrage and value uplift is simply incomparable,” JLL Hotels national director John Musca said.
It’s the third pub sale announcement in as many days for JLL which earlier this week announced the $32 million sale of a large-footprint hotel in Woy Woy on the NSW Central Coast, and the off-market sale of the Empire Hotel in Sydney’s Annandale.