The Quest apartment hotel in Adelaide’s northern suburb of Mawson Lakes is up  for sale. The property at 33-37 Main Street consists of a modern four-level 66-key, 87-bed apartment hotel  purpose-built to a high standard in 2009, situated on a prominent freehold island site of 2,467sq m.

The anchor tenant of the fully leased property is Quest, with serviced apartments occupying the upper  three floors, but the asset, which has a total of 6,069sq m of lettable area, also incorporates three  office and four retail tenancies on the ground floor.

The ground floor also has a guest reception and lobby area, gymnasium, toilet amenities, conference  room, kitchenette, storerooms, communications room and guest laundry.

The balance of the site comprises a 26 space car park utilised by Quest with a further 12 car spaces  available fronting Exhibition Lane used by the commercial tenancies.

100% of the freehold interest in the Mawson Lakes property is being offered to market via an  Expressions of Interest campaign run by Knight Frank agents Max Frohlich, Ryan Mills and Chet Al on  behalf of the vendor, a private Singaporean syndicate.

The asset generates net income of approximately $1,774,525 per annum plus GST, with a WALE of  8.8 years by income from October 1 2024, once the lease extension is commences.

Mr Frohlich said the opportunity presents attractive, core-return, defensive fundamentals to the  incoming purchaser in a market where riskier assets have been repriced conservatively with a greater  focus on tenant performance and viability.

“The fully leased asset was purpose-built for – and anchored by - one of Australia’s highest performing  Quest hotels, and with this tenant recently having signed a 10-year renewal an incoming buyer will  have a secure income stream.

“While Quest makes up 86% of the passing income for the property, there is also a diversified income  stream, with complementary commercial and retail tenants making up the remaining income, with CPI  or fixed annual rental increases in place for each tenant.”

Mr Mills said the property was of a high quality, with progressive refurbishments having taken place  since 2009.

“Beyond the current improvements and strength of the covenants, the property has embedded intrinsic  value, being in a strategic location on a high-profile freehold island site with four street frontages in  Mawson Lakes.

“Positioned in immediate proximity to the University of South Australia and Adelaide’s RAAF base, Mawson Lakes houses a world class defence ecosystem cluster benefiting greatly from AU$30 billion in planned defence spending in South Australia over the next decade.

“Seven of the world’s top ten defence companies call South Australia home with all seven having  presence within Mawson Lakes Technology Park, South Australia’s largest private defence cluster.

“The anticipated purchase price is also well below replacement cost, reflecting a value well below the  current median apartment cost for Mawson Lakes.”

Mr Frohlich said the Quest business model is supported by the stability and strength of the corporate  travel market and has been driven by the accommodation needs of the extended stay and business traveller. 

“Quest has negotiated corporate rates with major Australian companies, boasting a leading market  share in the industry. 

“Approximately 95 per cent of Quest Mawson Lakes occupancy is derived from extended stay corporate guests with the remaining approximately five per cent from leisure. 

The asset is a significant beneficiary of the immediately surrounding world class community of innovative, high-tech global organisations.

“Mawson Lakes is anchored by over 100 global technology companies, and its growing local defence  and tech ecosystem will continue to ensure extended business trade maintains a high level of  occupancy to drive strong RevPAR growth.”

The Expressions of Interest campaign for the Mawson Lakes property will close at 4pm (ACST) on  Thursday, 22 August 2024.

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