The Zagame family has sold the freehold of Reservoir’s Edwardes Lake Hotel for $28 million.
The deal, with Hotel Property Investments, comes two months since the vendor offloaded the leasehold to the Francis family’s IPR Hotels.
Coincidentally, last November, HPI outlaid $22.4m for another venue in the suburb – the Summerhill Hotel – also leased to IPR.
JLL’s John Musca and Will Connolly with Cropley Commercial’s George Iliopulos and Stephen Cropley marked the Edwardes Lake Hotel.
Five per cent yield
On 4.89 hectares at 257 Edwardes Street, the Edwardes Lake Hotel includes a bistro, sports bar with TAB facilities, indoor children’s play area, drive-through dual lane bottle shop and 306 car parks.
A gaming room contains 100 electronic gambling machines.
IPR is paying annual rent of $1.4m; with options, it can stay until 2081.
The operator paid Zagame Corporation $99m for the leasehold of it and three other pubs – at Ballarat, Berwick and Boronia – all which have been rebranded.
With current demand for pub investments at levels never seen before, the landlord is expected to sell those properties too (story continues below).
Second purchase and capital raising
HPI also announced today it is buying another pub, for $7.9m.
The manager intends to launch an underwritten capital raising for $50m to fund both properties and debt commitments. It plans to generate another $10m from a non-underwritten Security Purchase Plan, eligible to existing unit holders.
“Edwardes Lake Hotel is a well-known pub located 12 kilometres from the Melbourne CBD on a large site,” HPI chief executive officer Don Smith said.
“The property has a 19.4 year Weighted Average Lease Expiry, a triple net lease structure and favourable 2.5pc fixed rental reviews, which is consistent our stated strategy of acquiring high quality properties in attractive markets,” he added. “We are also pleased to have agreed terms with QVC to harmonise lease structures across our portfolio so that HPI retains gaming entitlements upon lease expiry across almost all of the QVC tenanted properties”.
In May, HPI outlaid $32.66m on six Queensland pubs including Marcoola’s Surfair Beach Hotel, which set it back $10.45m.
Last year, it picked up Brisbane’s Mango Hill Tavern for $31.3m and Airlie Beach’s Jubilee Tavern ($9.3m).
These eight properties are leased to QVC.
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