Gilmore to sell Newman Hotel

MLG Realty boss Marcus Gilmore is refocusing his efforts on his real estate business, which specialises in apartment sales, putting the Newman Hotel up for sale.

The 200-room hotel was recently refurbished and has an occupancy rate of more than 80 per cent.

When Mr Gilmore bought the hotel it had just 64 rooms, with the redevelopment focused on providing high-level accommodation for the many executives travelling through the town.

Other features of the hotel include a Pub TAB, restaurant, function rooms, beer garden, bottleshop and several different bars.

Mr Gilmore said he expected the asset would attract significant interest, but that the decision to sell out was bittersweet.

“Buyers are likely to take advantage of huge cost savings through economies of scale, or syndicated property investment trusts,” he said.

“Based on likely sale numbers, a trust structure could be set up providing retail investors in excess of 20 per cent fully franked returns, which is exceptionally strong in this market.”

The property will be jointly sold by CBRE and Burgess Rawson.

CBRE Hotels’ Ryan McGinnity said the hotel maintained a strong cash flow of around $1.2 million per month.

“The hotel … offers an attractive opportunity for the astute buyer to buy at the bottom of the cycle and reap the benefits of the next upswing,” Mr McGinity said.

Burgess Rawson’s Graeme Clarke said the recent refurbishments meant there was no need for capital works at the hotel, making the property a profitable proposition.

“In addition, the Newman Hotel Motel offers and impressive $1.25 million per annum in depreciation, making the after tax returns exceptional for the buyer,” Mr Clarke said.

“The property also has development potential for further accommodation and expansion of its bottle shop, as well as potential land of up to one hectare in the Newman CBD for future commercial development.”

Offers to purchase close September 3.