Property advisory Stronghold Investment Management is paying Pakenham Racing Club $16 million for an outer south-east Melbourne hotel with development potential.
The Cardinia Club is selling for at least $2 million less than was expected when it hit the market a year ago.
The 1.66 hectare holding at 71 Racecourse Road includes a 2234 square metre modern hotel and gaming venue, offered with a 15-year leaseback.
Licensed for 425 patrons, with a dining area, bistro and function room, the complex comes with 105 electronic game machines and is surrounded by a substantial car park.
Based on the annual rent PRC pays (about $1.2 million), Brisbane-based Stronghold is buying Cardinia Club on a passing yield of about 7.5 per cent.
The venue is next door to a block of land PRC sold in 2015, now making way for a 25-room hotel, the Pakenham Mercure.
In 2012, PRC banked about $30 million selling the nearby Pakenham Racecourse and Showgrounds to Industry Superannuation Property Trust which is replacing it with Ascot, a residential-based village containing some retail.
This 27 hectare former racecourse was reported as selling to Corcoris Group for $38 million in 2011, but that deal fell over.
Once a satellite region, Pakenham, about 55 kilometres south-east of the Melbourne CBD, is now considered an outskirt suburb.
Pakenham Racing Club relocated racing five years ago to a 243-hectare Tynong North site it acquired in 2008, and built a track on. Tynong North is about 63 kilometres south-east of the city.
Elsewhere in Melbourne, racecourse-controlled land at Flemington and Moonee Ponds (Moonee Valley), is making way for medium and high-density residential redevelopment.
Melbourne Racing Club recently unveiled plans for a $300 million mixed-use development on five hectares at Caulfield Racetrack. It is also reviewing the potential for development at Ladbrokes Park (otherwise known as Sandown).