"Traditional retail property investors are now looking to hospitality investment opportunities like The Crown Inn as an avenue to secure assets."
In the competitive hotel operating sector, few names stand out like ALH; a subsidiary of the ASX-listed Endeavour Group, the Group operates over 350 venues across the country, with the majority of these brands situated in Queensland and Victoria. That said, ALH is starting to see significant value in the South Australian capital of Adelaide, as they begin to ramp up operations in “The Wine State”.
According to the Group, they have 33 venues housed in South Australia, trailing Queensland and Victoria with 135 and 87 respectively. That is growing at a rapid pace, as ALH and Charter Hall's joint acquisition of The Emu Hotel demonstrated in August; $32 million paid for The Emu Hotel represented the largest price paid for a single pub asset in Adelaide ever. For investors, this means ALH’s South Australian portfolio is one you should keep an eye on, as its offerings are becoming just as respected as its Victorian and Queensland counterparts.
Crown Inn Hotel, 204-212 Old South Road, Old Reynella SA 5161
Enter: The Crown Inn. Situated in the Adelaide suburb of Old Reynella, this multi-faceted hospitality and gaming venue provides modern amenity and extensive facilities, including a large family bistro with children’s play area, sports bar with TAB terminals, gaming lounge with 33 electronic gaming machines, drive-through bottle shop and extensive on-site parking.
As the description indicates, it’s an adroit venue that accrues its income from a litany of sources. Now, the freehold interest in the pub is being taken to market, thanks to JLL’s Will Connolly, John Musca, Roger Klem and Stuart Taylor.
“Interest ranging from private capital to institutional funds will identify the value in security offered via the covenant of ALH Group, one of Australia’s market leading hospitality operators,” stated Mr. Connolly.
With a current net income of $868,000, the property provides investors with a strong platform of annual return in addition to a lofty, long lease; a 10-year initial term, followed by four further 10-year options. With proven hospitality operators like ALH, the leases stretch longer, giving investors security for the long-haul.
Crown Inn Hotel, 204-212 Old South Road, Old Reynella SA 5161
JLL’s Stuart Taylor believes that in the face of trying economic circumstances, landlords are gravitating towards holding income that guarantees continued revenue.
“The demand for long WALE assets continues to hold firm, with traditional retail property investors now looking to hospitality investment opportunities like The Crown Inn as an avenue to secure assets,” Mr. Taylor explained. “Investors are now acutely aware that these assets provide strong tenant covenants, landlord favourable leases and attractive underlying land value”.
With the South Australian government offering significant concessions for commercial property, including zero stamp duty, the time seems now to invest in a property of The Crown Inn’s ilk, if JLL's Roger Klem is to be believed.
“An approximate 5% saving on acquisition costs is further supported by a strong South Australian economy experiencing the strongest housing price growth nationally year-to-date and a 40-year defence spending boom,” states Mr. Klem.
The freehold interest in The Crown Inn is available via Expressions of Interest, closing Thursday 27th of October. Prospective buyers are advised to get in quick, because competition surrounding the hospitality industry has been well-publicised all year, and that competition is likely going to create major interest around this offering.
