The freehold of the Argyle Hotel has been sold to a local investor in a transaction worth $10.5 million, representing a sub-five per cent yield.
Located in the centre of Moss Vale in the NSW Southern Highlands, the sale of the well-established pub includes ownership of the liquor license and 15 gaming machine entitlements. The transaction was negotiated by HTL Property property directors Blake Edwards and Sam Handy on behalf of private owners, with the gaming assets alone estimated to be worth $5.25 million.
Sitting on a 1790sqm site, the current passive rent for the pub sits at $505,714 per annum excluding GST, with a combined 15 years left on the lease and favourable net lease terms.
The pub occupies a prime position on the Illawara Highway surrounded by flagship retailers and is set to benefit from a forecast of 5000 additional residents on completion of the nearby Ashbourne Masterplanned community.
Edwards commented: “The Argyle Hotel is a highly regarded suburban hotel operation within the Southern Highlands of NSW, and the stability offered by the business’s trading fundamentals and covenant quality, in combination with a protected local business model, made this a compelling acquisition target for the sophisticated investor market.
“This was clearly reflected by the fact the freehold was sold within less than a week of the campaign closing, and furthermore by the 4.80 per cent passing yield achieved.”
While opportunities to purchase such high quality assets aren’t often presented, HTL property director Handy says that when they are, the results demonstrate market confidence.
“This strong sale aligns with the most recent transactional evidence in the form of significant regional New South Wales freehold investment hotels being the Amaroo Tavern (Dubbo) and the New Albury Hotel (Albury); which delivered yields of 4.10 per cent and 4.09 per cent respectively.
“The combined depth of the buyer universe and passing yield achieved underscores the magnetism of freehold pubs as an asset class, with the strength of the tenant covenant and the relative scarcity of investment grade hotel opportunities across New South Wales adding weight to supply imbalance when considered in the context of the unsatisfied demand,” Handy stated.
