ALE Sells Six Hotels For $37m

By Annette Shailer

ALE Property Group today realised close to $37 million from the sale of six landmark hotels across three states at an auction that set a new record for the Australian hotel sector.

The auction created auction history, as private investors in four separate rooms in Sydney, Melbourne, Brisbane and Adelaide competed to acquire the ALE hotels using sophisticated audio visual technology.

CBRE Hotels and Burgess Rawson steered the sale campaign for the hotel freeholds located throughout Melbourne, Adelaide and Brisbane.

The auction achieved a 100 per cent clearance rate, with all six properties on offer sold under the hammer for a combined total of $36.782 million.

CBRE Hotels director, Joel Fisher, said the auction attracted frenetic bidding, with the Sunnybank Hotel in Brisbane sold on a yield of just 4.41 per cent - a new record for an Australian freehold investment hotel. The blended yield across the portfolio was a low 5.7 per cent.

The main auction room at Melbourne’s Crown Casino had 120 people in attendance, with live video feeds facilitating interstate bidding. There was an estimated 90 people at the Brisbane auction room, 50 in Adelaide and 30 in Sydney.

“The strength of the tenant and the length of the lease term provided a key point of difference, with all six hotels sold with 19 years remaining on leases to Australian Leisure and Hospitality Group with options to renew for a further four, 10-year terms,” Fisher said.

The two Brisbane ALE properties achieved the highest prices, with the Sunnybank sold for $11.1 million and the Albion Hotel sold for $6 million on a yield of 6.25 per cent. Both Brisbane hotels were acquired by local investors bidding from the Brisbane auction room.

Two Melbourne pubs, the Davey’s Hotel in Frankston and the Royal Hotel in Sunbury also sold under the hammer.

CBRE Hotels senior director, Scott Callow, said a local investor purchased the Davey’s Hotel for $5.35 million - representing a yield of 5 per cent - while a Sydney publican bidding from the Sydney auction room secured the Royal Hotel for $4.491 million, on a yield of 6.85 per cent.

The Brisbane auction room was one of the most active on the day, with a Brisbane investor also acquiring the Ramsgate Hotel in South Australia for $5.85 million - representing a yield of 6.61 per cent.

A second South Australian property the Enfield Hotel at Clearview was sold to a local Adelaide investor who travelled to Melbourne to be in the main auction room. The hotel sold under the hammer for $3.991 million, on a yield of 6.74 per cent.

Fisher said the strength of the tenancy covenant to ALH, which is 75 per cent owned by Woolworths Limited, had been a significant drawcard for investors.

A third Queensland hotel, the Caloundra CBX Hotel on the Sunshine Coast, was withdrawn prior to auction and is currently under offer and expected to exchange this week which would take the total dollar value of the ALE sales to over $43 million.