Victoria Park's Balmoral Hotel has been purchased by Sydney-based ALE property group for $6 million, joining Fremantle landmark the Sail and Anchor and Highgate's Queens Tavern in the group's WA portfolio.
The hotel is currently leased to the Woolworths-controlled Australian Leisure and Hospitality Group Ltd, to which ALE habitually issues 25 year leases.
The current lease over the property expires in February 2018, though ALH has two options to extend for five years.
The full text of a company announcement is pasted below
ALE Property Group is pleased to announce that it has acquired the Balmoral Hotel, Victoria Park, Western Australia, for an amount of $6 million repersenting a net acquisition yield of 6.3 per cent before transaction costs. The acquisition grows the portfolio to 103 properties with a total sum of individual values of $797.2 million. Completion is due to occur in the next month.
The property is currently leased to Australian Leisure and Hospitality Group Ltd on the following terms:
Lease expires February 2018. ALH has two options to extend for five years.
Rent increases annually each February (except 2008 and 2013) at Western Australian CPI, with a floor of 0 per cent and a cap of 5 per cent.
Rental review at February 2008 and 2013 and at each of the extension dates to the greater of Western Australian CPI (floor of 0 per cent and a cap of 5 per cent) or 7 per cent of the hotel's turnover
All lease obligations are guaranteed by Foster's Australia Ltd
The Balmoral Hotel was first established as a pub in the 1930s. Over time the property has been significantly expanded and in recent years it has been refurbished throughout and remains one of Perth's landmark pubs.
The property purchase will be funded from surplus cash balances.
"The Balmoral is a great hotel and ALE is very pleased to add it to the portfolio. It is a quality property with a long term lease to a very creditworthy tenant. In addition, ALE continues to examine a number of other acquisitions both in the pub sector and other types of commercial property," said Andrew Wilkinson, Managing Director of ALE.
The acquisition is consistent with ALE's stated acquisition policy.
