Wesfarmers' Queensland hotels saw strong bids

Three Queensland hotels run by Wesfarmers were the jewel in the crown of a busy investment portfolio auction at Crown casino last week.

Burgess Rawson auctioneer David Scholes put the hotel freeholds – all with new 15-year leases to Coles Liquorland – under the hammer before a large crowd in the casino’s River Room. They were among 14 commercial properties offered on the day.

Scholes said that, under Queensland law, Coles must run the hotels in order to retain the bottle shops – hence the long leases being offered. He said the company operates 92 hotels Australia-wide.

Strong bidding for the hotels – with more than 30 bids for the first offering - reflected investor confidence in the strength of the hotel industry.

The Royal English Hotel, in Sandgate Road, Nundah, attracted $7.75 million on a yield of 7%. As well as the new 15-year lease it comes with five 10-year options, as do the other two hotels.

Coles has agreed to spend $1.5 million on refurbishments on this busy inner northern suburban hotel which returns $550,000 net annually, with the tenant paying rates, taxes and insurance.

The hotel adjoins the Circa Nundah mixed use precinct with 184 apartments and 1200 square metre office tower. It has a public bar, bistro, function room and gaming room with 40 machines. There are 22 car spaces and three detached bottle shops. Nearby are a Woolworths store and 15 shops, as well as the railway line and freeway.

Bidding began at $6 million and ran quickly through 30 bids to the sale price.

The Currimundi Hotel, Motor Inn and Liquorland outlet in Buderim Street, Battery Hill, Caloundra, brought $5.8 million reflecting a yield of 6.9%.

Buyers may have been influenced by Scholes’ claim that the district’s 338,000 population was expected to grow almost 50% in the next 50 years, after having doubled in the past 10.

The hotel on 15,698 square metres returns $400,000 per annum net rent. It has a public bar, bistro, gaming room with 40 machines, and drive through bottle shop. The motor inn has 26 three-star motel rooms on two levels, and pool.

The complex is 500 metres from the beach in this popular tourism belt 90km north of Brisbane.

Taylors Hotel and Liquorland in Wood Street, Mackay, went for $3.150 million at a yield of 7.94%. Built in 1936 the hotel on a corner site of 1,287 square metres has 16 rooms and the Liquorland outlet and returns $250,000 per annum net rent.

Features are the extensive bottle shop and public bar, TAB, bistro, beer garden and gaming room with 35 machines.

Scholes said the Mackay region was benefiting from $4.5 million in residential projects. He said Wood Street was set for government funded refurbishments.

staylor@propertyobserver.com.au

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