Melbourne-based Impact Investment Group is set to expand its portfolio with the $70 million acquisition of Byron Bay’s iconic Beach Hotel.
Known as the "Top Pub" to locals, the Beach Hotel is situated on a 4,585sq m site at the apex of the commercial precinct of Byron Bay.
The hotel was listed mid last year with price expectations of between $75m and $80m.
In an off-market deal CBRE Hotel’s Daniel Dragicevich and Wayne Bunz representing Impact Investment Group struck a deal with Max Twigg, owner of the iconic beach hotel who paid $44 million for the hotel in 2007.
“This is a strong price for an Australian pub and highlights the considerable ongoing interest in the country’s hotel investment market.” Bunz said.
Melbourne pub industry identity John van Haandel currently leases the beachfront property on a 10-year lease with a further 10-year option. Based on current rental income, the sales price represents a 6.3% passive investment return.
An IIG spokesperson said the group saw strong potential to regenerate the “heart and soul” of Byron Bay with a strategy focused on achieving bold green and social impact initiatives over a three to four year period.
“We’re looking forward to settling this transaction in six months’ time. It’s a great hotel, and we’ve already made a lot of progress planning our environmental upgrades and how we’ll work with the operator and locals to deliver real positive impacts for the Byron Bay community.”
Hotel capital markets have been dominated by Eastern seaboard transactions, with Sydney and Melbourne amongst the strongest performing markets. The scarcity of hotel product for sale, particularly in the CBD market, with a large influx of foreign and local capital search for opportunity continues to drive yields stronger within a highly competitive transaction environment.
New South Wales lead hotel sales volume in 2016 with around 40% of total hotel sales by value. Major hotel sales included Park Regis City Centre ($46m), the Vibe Hotel ($97m), Mercure Parramatta ($40m) and the Adina Apartment Hotel ($30.6m).