Hotel Property Investments put two pubs on the market
Listed company Hotel Property Investments is selling two of its Queensland hotels.
The pubs are the Hotel Allen in Townsville and the Grafton Hotel in Cairns.
Both pubs have been leased to Wesfarmers subsidiary, Liquorland.
Coles runs Liquorland and operates 89 hotels in Queensland, WA, SA and NSW, all marketed under the Spirit Hotels brand.
The asking price: about $20 million.
It’s expected to attract plenty of prospective buyers with HPI being the largest landlord to the Coles subsidiary in the hotel space. It has a portfolio of 43 assets. The leasing arrangement with Coles is expected to be a major drawcard.
This comes at a time when the market for Queensland pubs is firming up.
The O’Neill family has put the renowned Airlie Beach Hotel on the auction block for the first time in three decades.
HPI has put the two regional pubs on the market to make the most of the bullish market for freehold investment hotels. Yields in the market have sharpened appreciably.
Hotel Property Investments has been a solid performer, and has achieved more than the average growth in earnings of the real estate industry over the past year.
Its return on equity sits on 18.9 per cent so HPI has performed better than the real estate industry average of 15.11 per cent.
While shareholders are expecting better returns, the bad news is that this metric is not expected to improve.
Analysts are predicting an ROE in 3 years to be around 7.7 per cent,
Which might explain why the group is to capitalise on the healthy market for Queensland pubs.
Daniel Dragicevich, Paul Fraser, Glenn Price and Darren Collins from CBRE Hotels are handling the sale of the two pubs.
The Hotel Allen sits on a 6186 square metre site. It has the potential to be developed or repositioned with a mixed-use precinct.
The Grafton Hotel in Cairns occupies a 3968 square metres of land and sits in a housing growth corridor.
by Leon Gettler, March 23rd 2017
