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Marine Hotel sells at a low yield

Prominent Brighton pub, the Marine Hotel, has just been sold.

For all followers of the pub real estate market, the most striking thing about the sale was the yield.

The pub, in one of Melbourne’s most prominent bayside suburbs, was sold to a mainland Chinese buyer for $15.8 million.

And the yield was just 3.3 per cent.

The sale comes at a time when international investors are looking at Australian pubs, all of them income-producing assets.

And the well-heeled investors are undeterred by full prices.

The bottom line is that yields have been shrinking across a range of commercial assets as capital flowing in from overseas seeks investment opportunities in major cities.

The tight yield for the pub is sure to raise interest among real estate investors.

The Marine Hotel, one of the well-known and popular landmarks in the area, attracted a lot of buyer interest.

Not least because of its income earning capacity. Sitting on 4730 square metres of land, the Marine Hotel generates an annual net income of about $550,000.

It was a point acknowledged by the agents who were handling the deal, CBRE’s Mark Wizel, Lewis Tong and Will Connolly in conjunction with Vinci Carbone.

“The Marine Hotel’s prominent corner position in the heart of Brighton ultimately was underpinned by the huge amount of interest witnessed both locally and offshore for the asset,” Mr Wizel told The Australian.

So while there was a lot of interest from local high-net-worth families and other property players through an expressions-of-interest campaign, the Chinese buyer out bid them all with his price.

The Marine Hotel has always drawn plenty of buyer interest.

A Chinese developer bought it last year for $13 million.

The developer is now planning to recycle equity into metropolitan and regional investments.

The big question now is what’s planned for the Marine Hotel.

The Beaumaris and nearby Mentone foreshore hotels have shut down in recent times. Brighton’s Khyat’s and even the Beaumaris RSL are no more.

by Leon Gettler, June 16th 2017