Royal Exchange Hotel Sold for $14.05m as Cashed-Up Investors Chase Covid-Proof Assets
Cashed up investors who are seeking “bullet proof” assets during the Covid-19 pandemic have added pubs to their shopping list with a renown Brisbane student pub selling for almost $3m above its book value.
Burgess Rawson’s Glenn Conridge said the ALE Property Group owned hotel at 10 High St, Toowong, sold well above the book value of $11.3m in a deal that realised a 4.01 per cent yield.
He said cashed up investors have realised pubs are part of the “essential services” sector along with health, service stations, fast food and childcare commercial properties are seen as safe options.
“Everyone is focused on what’s bullet proof and what’s safe,” Mr Conridge said.
“The thing with hotels is that every pub in southeast Queensland is allowed three off-site liquor licences within a 10km radius,” he said.
“So if the pub — or the mother ship — has to close during lockdown their liquor outlets are open and still making money and they can pay the rent.”
Mr Conridge with interest rates at around 2 per cent investors who want a good return can borrow and get a safer income than they would if they left their money in bank or risk the volatility of the sharemarket.
“What’s proven to be safe during the madness over the past 18 months are essential services,” Mr Conridge said.
The Royal Exchange is occupied by listed tenant Endeavour Group which is on a 25-year triple net lease with four 10 year options taking the tenancy out to 2068.
Overall more than eight Queensland properties worth $26m were sold at the Burgess Rawson auction.
Some of the other deals included two in Hervey Bay — Infinite Pharmacy in Torquay sold for $1.312m (4.96 per cent yield) and a Queensland Health tenanted property at Urraween for $1.841m (6.98pc).
Also, a medical clinic in Maryborough sold for $1.3m (7.72pc) a Bridgestone Flagstone for $2.65 (3.77%) and a Johns Lyng Group tenanted industrial property at Mount Louisa, in Townsville, for $1.150m (6.5%).