The hotel market is moving in a Far North Queensland tourism hotspot with one asset sold as another comes to market.
In a deal worth a reported $35-million-plus in Cairns—gateway to the Great Barrier Reef and the Daintree, and 1700km north of Brisbane—Australian hospitality group TPG Hotels has acquired the freehold interest in the Pacific Hotel Cairns.
The 4-star, 11-storey hotel on a 3570sq m CBD site comprises 207 rooms and suites, and guest facilities including a restaurant, guest lounge, swimming pool and carparking.
The asset also includes four retail tenancies, which are occupied by two long-standing tenants, Destination Cairns Marketing and Flamingos Tiki Bar.
CBRE Hotels’ Wayne Bunz and Hayley Manvell negotiated the sale on behalf of the Perth-based Pacific Hotels Group after a discreet off-market expression-of-interest process.
“The sale was negotiated ... following our client’s approach in mid-January, allowing us to target select investors capable of completing the transaction prior to the commencement of the client’s proposed refurbishment program,” Bunz said.
“This delivers another result for ... Pacific Hotels, following the sales of the Pacific Hotel Brisbane and Coral Cay Mackay.”
Opened in 1982, the hotel has had refurbishments and upgrades.
In 2018, 31 new rooms were added and during the 2022-23 financial year the guest rooms and hallways from levels four to nine were renovated. Levels 10 to 11, occupied by 44 rooms, are offline due to a fire in 2021.
“The sale represents an initial yield of 4.3 per cent and a stabilised yield on a three-year basis of 7.25 per cent,” Bunz said.
“This demonstrates the demand for Cairns’ accommodation assets with genuine upside.
“Infrastructure improvements and a lack of new hotel supply is underpinning investors in Cairns, with the supply constraints expected to support the continued recovery of the city’s limited pool of assets.
“This has already been reflected in increased room rates and revenue, with ADR and RevPAR 41 per cent and 24 per cent above pre-pandemic levels in 2023.”
Meanwhile, the Esplanade-fronted Cairns Harbourside Hotel is on the market for the first time in 33 years.
Situated on an almost 5000sq m plot on the Esplanade, the hotel, being offered with vacant possession has 173 rooms across two towers, as well as ground-floor leisure and food and beverage facilities with views of Trinity Bay.
Owner Taisei Kanko Australia is looking to restructure their investment portfolio and redeploy capital back to Japan, with JLL Hotels & Hospitality Group appointed to manage the sale.
JLL’s Adam Bury, Gareth Closter and Gus Moors are handling the sale.
Taisei Kanko paid $12 million for the hotel in 1991 during a rush of investment into the city from Japan. Industry sources believe it will fetch in the low-to-mid $30-million mark.
Also on the block in Cairns is the Pullman Cairns International and the adjoining Village Lane retail and commercial arcade, which have been listed for sale by Prime Value’s Shakespeare Property Group after nine years of ownership.
The five-star city centre hotel is on an 8139sq m site and comprises 324 guest rooms, 11 conference and meeting rooms, a lobby bar, a day spa and gymnasium facilities, and basement parking for 184 cars.
It is being sold by CBRE Hotels via expressions-of-interest campaign.
