Situated on a prominent corner in the heart of Sunbury’s CBD (significant growth corridor of Melbourne’s north-west), the Royal is leased to 75% owned Woolworths operator ALH Group. 

The 25 year lease (10 years remaining on the first term) at a current rental of $367,500 and additional 4 x 10 year options through to 2068 provides the astute interstate investor with AAA covenant security, net income with tenant paying all outgoings and a market rent review with significant upside opportunity in November of this year.

“This deal represents the sharpest yield for an ALH tenanted investment hotel in over 9 years” says Mathew George from JLL Hotels, “not since ALE divested the Sunnybank Hotel in 2009 has a premium been paid at close to 5%.”

Alex Richardson from JLL Hotels – confirms that "Investment appetite for A-grade product remains extremely strong, particularly assets underpinned by long, triple net leases with built-in rental growth mechanisms”.

“ALH tenanted hotels are always strongly sought after and our result demonstrates the depth and appetite in the market.”

The campaign yielded significant national enquiry which was not surprising given the rare AAA covenant and a market starved of quality investment product.

The sale follows JLL’s recent sale of the Clovelly Hotel to Sydney private investor for $32 million at a circa 5% yield also.

The Royal Hotel is an ex ALE asset sold by the listed company as part of a string of divestments in 2009. It shares the same lease as the existing ALE assets with the listed entity recently announcing a re-valuation of its portfolio of 86 ALH tenanted freeholds to $1,134 billion.

At an average cap rate of 4.98% up by .16 basis points since June 2017. The hotel significantly benefited from the uniform capped (10%) market rent reviews due in 2018 and the open reviews in 2028.

See also:

Melbourne Pullman Park Hotel sold to iProsperity Group

BPM Flinders Lane Melbourne hotel project sold to InterGlobe for $91 million

The Lucky Coq Chapel Street Hotel Melbourne for sale