The property market positivity created by the combination of the Coalition Government’s Federal Election win, and the Reserve Bank’s decision to cut interest rates to a record low, has given rise to hive of hotel sales activity in the Newcastle region.
“In the last 11 months, HTL Property has sold 5 Newcastle region freehold hotels for a combined $60.5M, representing significant investment as well as clear business confidence in the area” advised HTL Property’s National Pubs Director Dan Dragicevich. “These were highlighted by the sale of the Shaft Tavern in Elermore Vale to Sam Arnaout’s Iris Capital for $11.75M, and the Elanora Hotel sale to John Singleton’s investment arm Bonython for $23m” said Dragicevich.
The latest hotel set to come to market is arguably Newcastle’s best-known hotel, 96-year-old institution the Kent Hotel; positioned on a commanding corner site in the heart of the city’s bustling suburb of Hamilton. Well known as a high performing food and beverage operation, the Kent Hotel is a multi-level venue generating annual revenues in excess of $8.3M; and is ably supported by a 24-machine gaming room which regularly ranks in the top 300 of the State’s gaming hotels.
Other big name Sydney Hoteliers such as Andrew Lazarus, Marcus Levy, Simon Tilley, Dan and Sean O’Hara, Mark Malloy, James Hannon and Riversdale’s Matthew Beach have all recently acquired footholds in the area; and it is expected that the Kent Hotel will draw a consistent profile of high level interest. Similar assets have sold for over $25M.
“About 18 months ago we started to pick up a change in the narrative and focus of Sydney based hotel groups looking to the Newcastle and North Coast area for opportunities to invest capital at a discount to the fiercely contested metro markets” commented HTL Property’s Managing Director, Andrew Jolliffe.
“What was initially a value bet investors were waging has now, through the radical transformation of the Newcastle CBD and transport infrastructure, morphed into a high conviction and mid to long term investment strategy of having money out to work in a reliable and growing local economy” commented Jolliffe.
Also coming to market on the other side of town is the Beauford Hotel in Mayfield. This large format suburban venue has been owned by the Kearney family for over 30 years and is one of the few Hotels left in Newcastle still in the hands of private owner
operators. Interest is expected around $5.5M.
“The hospitality market in Newcastle has always been very strong, however is further underwritten by an airport now welcoming international flights, a government funded light rail project which complements the huge private investment into the Revitalizing Newcastle project set to rejuvenate the CBD. Additionally, Newcastle is perfectly positioned to take advantage of short stay demand for world class beaches and Hunter Valley vineyards in Australia’s first wine region” concluded HTL Property Director
“We’ve just been through a 10 week period whereby we had a State election in NSW, a Federal Election, Anzac Day and the Easter school holiday periods in the same month; and notwithstanding the elevated risk of investor distraction over this time, the market has clearly remained focused and if anything now appears to us emboldened by the clarity the political and economic topography consequently provides all participants” commented Dragicevich.
“With continued downward pressure on interest rates, the emerging prevalence of nontraditional sources of funding and the struggle between supply and demand perpetually imbalanced, we are maintaining our market guidance that yields will contract further before they consider any form of augmentation” concluded Jolliffe.
The EOI for both The Kent Hotel and the Beauford Hotel close Thursday July 4.
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