Newman Hotel Motel sale to fuel strong interest from investors

​Perth, 05 August 2015 – The 200-room Newman Hotel has been listed for sale in a move that coincides with the state government’s vision to expand the regional hub’s population from 5,000 to 15,000 over the next 20 years.

Built in the late 1960s, the popular hotel has undergone extensive refurbishment over the past three years, and maintains solid profit margins with a current occupancy in excess of 80%.

The property features 204 guest rooms, a public bar with Pub TAB, restaurant and bar, function room, bistro and bar, beer garden and bar, bottle shop, three commercial kitchens and extensive cool room and storage facilities.

CBRE Hotels’ Ryan McGinnity and Burgess Rawson’s Graeme Clarke have been appointed as joint exclusive agents to sell the popular watering hotel after its owner, Marcus Gilmore, relocated to Perth to re-focus his attention on his real estate business, MLG Realty.

Mr McGinnity said the sale came at an opportune time, with the government recently unveiling plans to grow the regional hub and resource giant BHP Billiton announcing new projects in the area.

“Newman, like most towns, faced significant change in market dynamics following the mining slowdown, however, the hotel is well positioned to capitalise on a new tranche of projects earmarked for the area,” Mr McGinnity said.

“Earlier this month, BHP Billiton announced the expansion of one of its Newman mines, and in conjunction with this, construction is underway on a new shopping centre directly next to the hotel. There are also several other infrastructure projects expected over the coming years, to assist in the town’s growth.”

Mr McGinnity said the property had adapted to the changing market conditions, moving into a primarily food and beverage focused operation.

“The hotel has been substantially upgraded from the original hotel and is now ready to be run as a great pub and accommodation business, with the potential to service an expanded population of approximately 15,000 in the future,” Mr McGinnity said.

“With current turnover at around $1.2 million per month, the hotel maintains a strong cash flow and offers an attractive opportunity for the astute buyer to buy at the bottom of the cycle and reap the benefits of the next upswing.”

Newman, which has nine separate iron ore mines surrounding the town, is positioned for solid growth as a major regional centre, with the recent spate of approved projects ensuring sustained activity for the town.

Mr Gilmore said the decision to sell was bittersweet, however, he expected the asset would attract interest from existing operators in the North West.

“Buyers are likely to take advantage of huge cost savings through economies of scale, or syndicated property investment trusts,” Mr Gilmore said.

“Based on likely sale numbers, a trust structure could be set up providing retail investors in excess of 20% fully franked returns, which is exceptionally strong in this market.”

Joint selling agent, Graeme Clarke of Burgess Rawson commented on the property’s sale: “Unlike many regional hotels, which are in need of significant capital works, this hotel is already operating as a profitable going concern. In addition, the Newman Hotel Motel offers an impressive $1.25 million per annum in depreciation, making the after tax returns exceptional for the buyer.

The property also has development potential for further accommodation and expansion of its bottle shop, as well as potential land of up to one hectare in the Newman CBD for future commercial development.

The property is being offered for sale by Offers to Purchase closing at 5pm Thursday 3rd September at the offices of CBRE and Burgess Rawson Perth.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue).  The Company has more than 52,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 370 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.