Two of the Gold Coast’s most well-known hotels have hit the market in the same week, taking advantage of a booming hotel sector and a strong post-Commonwealth Games development pipeline.
The two hotels, the Crowne Plaza and the Hilton Hotel in Surfers Paradise have launched to market for a collective $200 million.
The blue-chip Hilton Hotel in Surfers Paradise has been offered up for sale for at least $80 million, while the Crowne was listed with expectations north of $100 million.
Gold Coast hotel operators cashed in on the visitor boom during the 2018 Commonwealth Games, with an average occupancy rate of 86.6 per cent.
The hotel sector has been flooded with listings in the last week, with $300 million worth of Ibis-branded AccorInvest hotels hitting the market on Tuesday.
Hilton owners to make $30m profit in three years
Privately-owned company Ji Feng purchased the Hilton hotel from Brookfield Multiplex in 2015 for $50 million.
The Chinese-based owners will now be looking to make a significant profit on the landmark mixed-use development in the heart of Surfers Paradise.
Positioned across two iconic towers, the offering comprises the Hilton Hotel and the associated management rights for the Hilton Residences.
The hotel, which has 169 rooms and 250 residences, also boasts conference facilities, a day spa, four food and beverage outlets and 89 undercover car parks.
McVay Real Estate Australia has been appointed to sell the property after handling the previous marketing campaign in 2015.
“The Hilton Surfers Paradise is one of the newest and most centrally located 5-star hotels in the market,” McVay managing director Sam McVay said.
“It will be acquired substantially below replacement cost and allows an incoming owner the ability to further enhance income through a number of value-add initiatives.”
McVay Real Estate’s Sam McVay said the Gold Coast market is among the best-performing destinations in Australia.
“The Gold Coast remains one of the best-performing markets in Australia with STR reporting Year to Date RevPAR up 15.6% on 2017.”
“We see the continued growth across the entire Gold Coast market over the coming years on the back of unprecedented infrastructure investment into the Airport, rail and roads.”
Crowne Plaza listed for $100 million
The Gold Coast’s Crowne Plaza has been listed on behalf of a Singaporean owner moving to capitalise on the current strength in the Gold Coast hotel market.
The hotel offers 370 rooms, a two-level penthouse, extensive retail space, a bar, 15 function venues, a 261-space parking complex and multiple food and beverage outlets.
Almost $2 million has been spent on upgrading the buildings central facilities and additional development approval has been procured with approval for 234 apartments in a 46-level tower.
CBRE Hotels has been exclusively appointed to manage the sale of Crowne Plaza.
“There are very few sites of this scale available for development in this precinct, and this opportunity also offers holding income, allowing flexibility for a developer to immediately undertake the residential development or hold until the next development cycle,” CBRE Gold Coast managing director Jonathan O’Brien said.
In the year to date the Gold Coast has been the best performing hotel market in Australia with the Commonwealth Games establishing momentum that has continued into June.
“The Gold Coast has experienced a long period of growth and currently trades on an annualised basis at near-record occupancy of 72.8 per cent with average rooms rates for the 12 months to June 2018 at a record of AU$197.42,” STR regional manager Matthew Burke said.
“Events like the XXI Commonwealth Games provide a short-term direct performance boost to the norm but performance overall continues to grow and May and June’s monthly results demonstrate the continued growth to prior year.”
AA Reit to buy Gold Coast industrial property for A$38.5m
SINGAPORE – AIMS Apac Reit (AA Reit) is expanding its footprint in Australia with a A$38.46 million (S$36.92 million) acquisition of a freehold industrial facility in Gold Coast, its manager announced on Wednesday morning (May 15) before the market opened.
In a press statement, its manager noted that AA Reit has entered into a sales and purchase contract with GSM Rocket Australia to purchase Boardriders Apac HQ, located in the suburb of Burleigh Heads, Queensland.
The deal amount was arrived after considering an independent valuation by CBRE Valuations Pty Ltd, which valued the property at A$38.46 million.
After including stamp duty payable and other transaction costs, the total estimated cost of the acquisition is about A$41.5 million. This is expected to be funded mainly from Australian dollar debt facilities in order to maintain a natural currency hedge on the acquisition, the Reit manager said.
Assuming that the transaction will be fully funded by debt, AA Reit’s aggregate leverage post-acquisition will increase to 35.5 per cent on a proforma basis, up from 33.7 per cent as at March 31, 2019.
The property will be leased to GSM Operations Pty Ltd for 12 years on a triple net lease basis, which is a lease structure where the master tenant is responsible for outgoings of the property, including repair and maintenance costs, insurance, and taxes, among other things.
Both the vendor, GSM Rocket Australia, and the tenant, GSM Operations Pty Ltd, are subsidiaries of Boardriders Inc, a global actions sports and lifestyle firm that designs and distributes brands including Quiksilver, Billabong and Roxy.
The first year rental from the property is A$3 million, and will increase by 3 per cent per annum, with a rent review at mid-term of the lease, the manager said. Under the contract, the tenant also has an option to renew the lease for another five years.
The development, which sits on a land area of 33,300 square metres (sq m), with a total net lettable area of 14,833 sq m, comprises a warehouse and office facility, as well as a two-storey retail building.
Notable properties in the vicinity include Stockland Burleigh Heads Shopping Centre, and the upcoming Kaufland giant supermarket. The property is also situated about 3 kilometres from Burleigh Heads Beach, and a less than 20-minute drive from Gold Coast Airport.
Koh Wee Lih, chief executive of the Reit manager said: “The proposed acquisition represents an opportunity to further diversify and strengthen our portfolio with a strategic addition that offers a strong tenant profile, and provides income stability to AA Reit. In line with our strategy to build a high-quality, diversified portfolio of assets that creates long-term value for our unitholders, the acquisition will be DPU accretive.
“The outlook for the Gold Coast economy remains positive, as the region is currently experiencing growth across key economic factors including strong population growth, investment into major infrastructure developments and an increase in both domestic and offshore tourism into the region. This investment will enable us to expand AA Reit’s footprint in a market that offers solid long-term growth,” added Mr Koh.
Upon completion of the acquisition, AA Reit will own a total of 27 industrial properties, of which 25 are located throughout Singapore, with one located in Gold Coast, Australia, and a 49 per cent interest in a property located in Macquarie Park, New South Wales, Australia.
As at 10.51am on Wednesday, units in AA Reit were trading at $1.39, up 0.7 per cent, or one cent, after the announcement.
Dexus Eyes $100m Sale for Brisbane Retail Centre
Dexus Wholesale Property Fund are looking to offload a 100 per cent freehold interest in Beenleigh Marketplace, a sub-regional shopping centre located 32-kilometres from Brisbane’s CBD.
The 19,476 square metre asset, which last transacted in 2013, is anchored by Woolworths and Big W and spans a 60,680sq m site.
The landholding also includes 4,390sq m of adjoining land earmarked for further development.
JLL head of retail investments Simon Rooney has been appointed to market the expressions of interest campaign amid weak sentiment in the retail property sector.
“Investors are pursuing a low-risk retail strategy at present,” he said.
Rooney said investors were targeting small and mid-sized sub-regional centres with a major focus on retail services along with food and beverage offerings.
“F&B has consistently been the fastest growing retail category over the last five, 10 and 20 years, which underpins solid leasing demand.”
Recent transactions for sub-regional centres include the Rockdale Plaza sale in Sydney purchased by Charter Hall for $142 million last month, Sydney’s Neeta City purchased by Elanor Investors for $85.3 million in March, and Melbourne’s Campbellfield Plaza bought by Charter Hall for $74 million in December last year.
Transaction activity was highest within the $50-million to $150-million bracket for retail property last year.
Rooney said the Beenleigh retail hub outperforms the industry averages with total centre moving annual turnover (MAT) of $113.7 million.
Beenleigh, located in the city of Logan, has a current population of 83,570 which is expected to increase 2.1 per cent annually to 2031.
The expressions of interest campaign closes on June 6.
Tenant Demand in Gold Coast Office Market Expected to Rise
Investment activity in the Gold Coast office market was subdued in 2018 with few assets on offer, although Knight Frank expects the tide to change this year with around $90 million in assets hitting the market in 2019’s first quarter.
The office investment market on the Gold Coast, Australia’s sixth largest city, has traditionally been dominated by private investors and syndicators given the relatively smaller investment scale.
But as confidence builds with a higher level of tenant demand and the depth of the market, Knight Frank’s Mark Witheriff says the region is “likely to appear on the radar for a greater swathe of investors”.
Sustained population growth is forecast to average two per cent per annum over the 25 year period from 2016 to 2041, with the majority of growth to come from both internal and overseas migration attracted to lifestyle and educational opportunities, according to Knight Frank’s Gold Coast office market overview.
Local businesses dominate demand
While tenant demand in the Gold Coast office market has been dominated by local businesses, Knight Frank’s Tania Moore said there’s a growing core of larger corporates with branch or head offices located in the region.
“With the likes of National Disability Insurance Agency, Mantra Group (Accor) and Wyndham Vacation Resorts and Asia Pacific,” Moore said.
“With only 37,500sq m of supply added to the Gold Coast market over the past 10 years (9 per cent growth in the stock base) there is a relatively small pool of modern assets which can handle the higher employee densities required for major corporate branch offices, processing centres and call centres.”
The research found supply remains low but pre-committed new construction was beginning such as the recently acquired Acuity Business Park, snapped up by Alceon last month for $7 million from the Gold Coast City Council, which plans to kick off construction.
Knight Frank’s Jennelle Wilson says the supply of new office space across the core Gold Coast precincts stalled during 2018 with only 2,744sq m of refurbished space returning to the market.
“Supply is expected to remain small, sporadic and pre-commitment driven in the medium term.”
Total vacancy for the Gold Coast office market is 11.6 per cent, this after hitting 12 per cent mid last year.
“Despite the vacancy rate on the Gold Coast stalling at double figures, rental growth is well entrenched due to the relatively low number of quality options available, with prime effective rental growth of 5.9 per cent year-on-year recorded,” Wilson said.
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