Solid NSW pub sales for Q1

​Sydney, 26 March 2012 - CBRE Hotels has negotiated the sale of circa AU$22 million worth of pub assets in NSW during the first quarter of 2012.

In addition, a series of other deals with a total value of over $10 million are close to being transacted, off market through CBRE Hotels.

CBRE Hotels Director Joel Fisher said demand remained strongest for freehold going concern assets of $10 million and below.

Mr Fisher and CBRE Hotels Manager Daniel Dragicevich in conjunction with Manenti Quinlan & Associates negotiated the most recent sale of the Australian Youth Hotel in Glebe on behalf of Grant Thornton.

A private investor snapped up the asset a day after auction for $5.1 million. Meanwhile, The Welcome Hotel in Rozelle sold under the hammer the previous day for $6.5 million. Both sales reflected stronger than expected yield results.

“Good quality assets with sound business fundamentals continue to attract solid demand, although there remains a disconnect between purchaser and vendor expectations,” Mr Fisher said.

“Among other factors, the watering down of the poker machine reforms proposed by Andrew Wilkie has seemingly led to a return in purchaser confidence.”

The sale of The Lakes Hotel at The Entrance on the NSW central Coast represents one of the larger pub sales of the year. A private investor acquired the prominently located asset for $8.15 million representing an initial yield of circa 13%.

Mr Dragicevich said the NSW pub market currently presented a fantastic countercyclical opportunity to acquire significant assets.

“Optimism is returning to the sector as hotel trade stabilises however, access to funding remains limited as financial institutions are wary about what the next six months holds in store,” Mr Dragicevich said.

“We have fielded enquiries from a range of interested parties recently not limited to traditional pub owners and operators but also, encouragingly, from new entrants to the sector, and newly established syndicates, which is a positive sign for the industry.”

Among the other transaction recently completed by CBRE Hotels, the Jolly Frog Hotel in Windsor was purchased prior to auction for $1.87 million.

Looking forward, an increased amount of pub stock is expected to become available as mortgagees move on distressed owners and, well capitalised owners look to acquire strategic assets.

“We still expect to see a few distressed assets come on the market however the main difference between now and even 12 months ago, is that there are more buyers around, albeit with their own price in mind,” Mr Fisher said.

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 firm (in terms of 2011 revenue).  The Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 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 Web site at www.cbre.com.