Tudor Inn sale sets yield benchmark

The Tudor Inn (marked) at the north east corner of Nepean Highway and Goulburn Street.

ALE Property Group is banking $15.66 million from Cheltenham’s Tudor Inn.

The price reflects a net passing yield of 3.79 per cent, making it the tightest of the eight hotels the investor has sold this year.

It is also $3.81m – or 32 pc – over the June 30, 2021, book value.

CBRE’s Nathan Mufale, David Minty, Scott Hawthorne and JJ Heng were the agents.

Best until last

The Tudor Inn was only the second hotel ALE offered this year via tender; all the others were auctioned.

Mr Mufale said eight offers were received – five from international groups.

“An unconditional outcome and 90 day settlement were achieved as a result of the heightened competitive tension generated by the sale process,” the agent added.

“To generate over $100m in offers represents the increased weight of capital currently competing for blue-chip assets in Melbourne’s commercial property market,” according to the executive.

Mr Heng said “large Activity Centre [zoned] landholdings with income are highly sought after by international investors on long-term purchasing strategies” (story continues below).

In June, ALE banked $33m – a 4.23pc return – from the Boundary Hotel at nearby East Bentleigh.

That property also traded following a tender campaign.

In regional Victoria, the Morwell Hotel sold for $3.06m – reflecting a 4.74pc yield and a 13pc premium to book value.

The other five assets ALE divested this year were in Queensland including Toowong’s Royal Exchange Hotel, which achieved $14.05m (a 4.01pc return), Caloundra’s Pelican Waters Inn for $10.8m (4.15pc) and the Noosa Reef Hotel for $13.9m (4.98pc).

In Kedron, the Edinburgh Castle traded for $7.5m – a 4.65pc yield while the Kedron Park Hotel exchanged for $4.6m (4.98pc).

The Cheltenham property contains a pub and bottle shop covering less than half of the 4789 sqm site.

There are also 60 car parks.

The occupier, Endeavour Group, is on a lease expiring in seven years; with options it can stay until 2068.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.